Using the demand and supply model, explain and illustrate the effect of coronavirus outbreak on the market for lobsters in Australia.

Coronavirus is the disease that has hassled towards the loss of business in number of different sectors and that has lead towards the slowdown in an economy. As it has been given in the question, because of the rapid rise in the cases of this disease China was being forced to ban on the live seafood imports and it has also taken a huge toll on the different communities of an island at a moment when the different lobsters in Australia are bountiful. There are disastrous effects of this coronavirus on the market for the Lobsters in Australia. Back in the previous years they used to sell their per Lobster at almost $45-50 rate and the month and January along with the February used to be the most busy along with the high peak of sale as well. Now the price of this lobster has been decreased to almost $15 and this is causing a great negative impact on the economy of Australia as well. (Mobsby, 2020)

Economy of the Australia was already showing some of the signs for weakness before taking the wildfire took hold in the fourth quarter. If the things keep on going in the same way it remains really difficult to quantify the lasting impact of this coronavirus, economists of the Australia also believe that it will be even way more larger than the Sars Virus which came almost 17 years ago that has cut down the Australian GDP by only some points that is 0.1-0.2 percent. This decrease of lobster price has given a red alert to the economy of Australia and this is really an alarming situation. This coronavirus has spoiled the lives of every individual and cause a great impact on the lives of every individual along with the economy as well. From the graph below it can be easily seen that how the scale has gone down.                                            

Graph 

Q2 (a). Use the determinants of price elasticity of demand to analyze whether the demand for lobsters is likely to be price elastic or inelastic.

Elasticity of demand is the sensitivity of the demand for different services and goods because of the change in another factor. There are different economists who measure the demand for elasticity to know that how the consumers behave and spending of different patterns are also being effected along with specific factors are being considered. (Bijmolt, 2005)

Different factors that influence the demand of elasticity,

There are three different kind of the goods that I have analyzed by reading the case study related to the sale of lobster in Australia along with its impact on the economy as well and it includes three different kind of the goods that include comfort, necessity along with the luxury good as well. It is very essential and important to know about the taste of consumer along with their point of view as well as one might consider it as a comfort and other may consider it as a luxury.

Price is the other determinant that can affect the demand elasticity of these lobsters at their price level.

Income effect is also another determinant, it is the income level for the population which also impacts the demand elasticity for the different goods along with the different services as well.

Last one is the substitute availability, if there comes a readily available substitute for the different variety of the lobsters then this substitute makes the demand for a good elastic. In other words if we talk about it, this substitute makes the demand for the different services along with the goods towards the change of price.

Different factors have been discussed in detail that influence all of them and it has also been found out that the demand for the lobster is most likely to be price elastic. The Australian market has stored a huge amount of the lobsters for almost 3-4 weeks and this is because of the controlled temperature because if the temperature goes up and it gets really hot then it would definitely be too difficult to save them and now they are at least being sold out at the rate of $15 but if they get expired or start giving smell it means they are of no use and it would really be difficult to use them and they won’t be of any use. (Herrmann, 2004)

Q2 (b). Based on your analysis in Q2 (a) explains and illustrates graphically what will happen to the total revenue of the lobster industry following a decrease in price of lobsters.

There are two different kind of the general ways to assess the substitutability, first one is by the analysis of conventional demand and the other one is the time series of the analysis of price.

In the conventional demand of the analysis there comes an estimation of the specific demand relationship. Mostly this approach is the variation of models in the sold volume of one individual product in the terms of different variations in its own price.

In the time series analyzation of different prices there are different patterns over the time of different prices. Main focus here is that whether there is a relationship between the different prices.

                                                                                             Graph 2                                                                                                 

Quantity of the lobsters are increasing in the market of Australia and the price is falling down with the passage of time. This is not just it, with the passage of time it is also becoming much difficult to handle these ample amount of the lobsters with the rice in temperature.

Q3. Using the demand and supply model, explain and illustrate how the changes in the market price of lobster, due to the coronavirus will change consumer and producer surplus as well as the economic surplus?

Because of the coronavirus outbreak it has very limited shipment to the China and the price of the lobsters have also reduced to the great extent. Price of the lobster has fallen to the great extent and it is to its lowest price in the last four years for now after some of the charter flights has come to the standstill during the onset of an outbreak of coronavirus. As its result thousands of the pounds of surplus lobsters have been drowned in the different markets along with the decline in their price as well. Different seafood companies in Australia has also been dropped down in a business from the slowdown in China. Economy is falling down and the producers are facing number of difficulties to control the surplus amount of lobsters because it is not an easy task to store them in an ample amount plus along with this how their price is falling down it also gives the sellers really tough time. Consumers are addicted to this lobster but as the supply is down and they can’t get them they are also having different issues in their diet as it is an important part of their diet. It is becoming really hard for the consumers to survive and skip eating such a fancy dish in their lunch or dinner. This coronavirus outbreak has not just disturbed the sale of lobsters but the economy of Australia is suffering a great loss and if things remain same then it would be really difficult and hard to cope up with the things and bring them back on track. Producers are facing a really hard and tough time because this is there only source of income and because of the limited supply and the decreased price of lobsters they are also facing a difficult time. They are managing out the surplus amount of lobsters but still because of their limited resources it is even becoming really hard and tough for them to handle such large amount of the lobsters as they are not being sold. This season used to be the peak season of the lobster sale and China was the one who used to have most of them but things have changed a lot and now for this year there is not being seen any of its solution instead of just accepting the fact.  (Leland, 2017)

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