Question 1:

The following information is extracted from an article

1

about

Coronavirus

relief measure

in

Hong Kong

.

Hong Kong's embattled leader on

Wednesday unveiled her government's biggest coronavirus

financial relief package so far, offering a HK$137.5 billion (US$18 billion) lifeline to save

ailing businesses and ensure some 1.5 million workers would continue to get paid in the tough

months ahead

.

The

government would, through employers, pay 50 per cent of salaries for half a year, each

worker's monthly subsidy capped at HK$9,000

.

M

any small

businesses

are seriously affected by the Coronavirus. For example, some Chinese

restaurants

revealed that they

might close their business in next few months.

1

Coronavirus: Carrie Lam unveils Hong Kong's biggest Covid

-

19 relief package yet, worth

HK$138 billion, to ensure 1.5 million workers still get paid

. SCMP. 8

th

April 2020.

a

) Starting

with long run equilibrium, show how small business are affected by the Coronavirus.

Explain with aid of diagram.

(

6

marks)

b

) The Hong Kong government proposed to subsidize the salaries of business. Discuss why

some small business still decide to close in

short run. Explain with aid of diagram.

(7marks)