Question
Some versions of the lockdown rules included curfew hours (time in which all business should be closed, and public transit is limited only for cases
Some versions of the lockdown rules included curfew hours (time in which all business should be closed, and public transit is limited only for cases of urgency). Other versions simply included suggestions for business' to implement social distance policies. Let the parameter(0,1) represent how strict are lockdown rules. Let f(,q) = q / (10) be a function that represents the cost of COVID-19cases, it depends on how strict are the lockdown rules,, and the level of economic activity,q. Then consider a perfectly competitive market model in which marginal cost is constant and equal to 1 in the absence of lockdown, and equal to 1 + when lockdown rules are in place. Finally, consider a linear demand functionqd= 2p. Find the optimal level of assuming total economic surplus is equal to consumer surplus plus f(,q).
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