QUESTION TWO [35]

2.1 The fear of nationwide lockdowns due to the current pandemic has pushed many consumers into "panic buying". Critically evaluate this statement and use demand and supply analysis to analyse the possible impact of panic buying on market prices. (15) 2.2 Substantiate the type of income elasticity most applicable during this time. (10) 2.3 Explain the importance of marginal cost and average cost to managers. (10)