Managerial Economics Report: COVID-19, Market Failures, and Analysis

This report delves into the macroeconomic effects of the COVID-19 pandemic, exploring its impact on global economic growth, employment, and various industries. It examines government tools used to address market failures, including price regulations, trade policies, and subsidy programs. The report calculates the break-even point for the Abner corporation under different scenarios and analyzes factors influencing demand and supply. It also addresses the specific challenges faced by the airline and sweet corn industries during peak consumption periods and discusses externalities in air transport. The report concludes with an overview of the pandemic's impact on business restructuring, consumer behavior, and economic policies, offering insights into the complex interplay of economic factors during a global crisis.

Managerial Economics

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Macroeconomic angel of COVID pandemic...............................................................................3
Various tool to deal with market failure......................................................................................5
Break-even point for the Abner corporation................................................................................7
Factor that cause in the increase in demand and supply..............................................................7
Factor to be analysed for airline tickets and sweet corn during the moth of heaviest
consumption.................................................................................................................................8
Lincon company..........................................................................................................................9
Externalities and Air Transport.................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
COVID outbreaks have been spread over 200 countries as it has negatively effacing term global
economic growth in last century. The economic fallout has resulted as the pandemic have
increases, the risk often global economic recession has increase. there have been increase in te
level of climate emergency and extreme inequality. In addition to that’s major disruption in the
field of work in respect to robots and systems replacing humans. The report will have the
discussion on macroeconomic angel point of view of COVID pandemic and government various
tools to deal with market failure. the slowdown in the economic growth due to COVID 19 have
ed many of the business to go through the major restricting. The report will include Abner
corporation breakeven point will be calculated along factors for increase and decrease of supply
and demand scale. At last the report will have case of externalities and air transport discussing
the advantages and disadvantages of air travel expansion.
MAIN BODY
Macroeconomic angel of COVID pandemic.
The spread of the pandemic has been seeping into the gulf countries and economies by
reporting the worst challenging condition. As per the research it has been stated as the
outbreak leads to a major weight on the export and supply chains to the second biggest Arab
economy.
Due to the COVID 19 pandemic, the economic recession have taken places with the un
experienced level of unemployment such as the great depression happened in the year 1930.
In addition to that, Saudi Arabia has the new orders and employment trends have lost all
the momentum with the start of year 2020. UAE have begun to limit their respective
activities due to the weaker section of orders where the employment has started to fall again
amid the efforts to streamline costs. The country and firm are facing major issues due to the
hitting of pandemic on supplier performances which is creating globally significant delays to
the freight deliveries as well as weaker export demand. The firm is also facing credit issues
back logs for the fifth running months. Due to the pandemic, there have been the increase in
the additional cost in level of poverty, upgradient of the lifestyle, career derailed along with
the increase in social unrest having the big weigh on economic growth.
Market is considered to be anticipating the hospitality, retail, real estate, construction,
banking and commodity-based companies will report up to 50 per cent decline in their
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second-quarter profits amid worldwide economic slowdown after the corona virus outbreak
earlier this year. The statistics having the look out to be COVID pandemic have affected the
job in the global levels is term to be estimated 2.7 billion workers out of job in permanent
manners.
Services sectors like the aviation and tourism industry have been hit the hardest. There
have been many of the Americans to have lost in thousand pays, laid off and closed business
responses to the pandemic. there have been many level of underdeveloped countries which is
out of pocket expenditure to push the to poverty.
As a result, the companies were hiring in aggressive manners. The jobs were lost and
people were facing the serious level of pay cuts by triggering the various difficult economic
times. The level of situations as the employer per imposes to have the period to the paid
leaves and deductions form the annual leaves. The industries have been placed on unpaid
leaves with their agreements. This has been imposed with the reduction in salary as per the
temporary and permanent basis to reduce the salaries of the employees with agreements of
employees. Hence the slowdown in the economic growth have resulting for the COVID
pandemic leading many businesses to go through the major level of restructuring such as the
head reduction, eliminating bonus along with mandatory unpaid leaves. This have there
lowering the consumer purchasing power and decresed personal speeding across broad range
of industries.
The company has the effort to minimize the redundancies and incentives with other
alternatives to reduce excess of employees. During this time the employer must continue to
provide their housing and all other entitlements (apart from basics alary) until the employee
leaves the country or gains employment with different company. In such circumstances it is
understood that the contract appendix to reduce the employee's salary as mentioned above
should be completed.1
1?Barbato, M. and Thomas, J., 2020. Far from the Eyes, Close to the Heart: Psychological Impact of COVID-19 in a
Sample of Italian Foreign Workers. Psychiatry Research.
COVID-19 impact: UAE’s credit demand takes a hit in second quarter of 2020 [ online ]
< https://gulfnews.com/business/banking/covid-19-impact-uaes-credit-demand-takes-a-hit-in-second-quarter-of-
2020-1.73081387>
.
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Various tool to deal with market failure.
Price Profit Regulations
This has been identified as the economic regulations generally being specified to the utility
industries. This has been the basis of the several factors form the production inputs to the
efficiency and saving moving on to inflation. COVID impact reduction has forced utilities to
become efficient in the respective operation. But this process has also resulted in less level of
expenditure to maintain the upgradation of level services.
Restrictive Trade policy and practices
As per the prime minister of the UAE detailed level of hastening tweets which is intended to
have craft the agile governments quickly to solidify the achievement of our nations. he country
most economic sectors have hit hard by looking into the sharp decline in the tourism and
collapsing of oil markets. The country has cut 50% of federal entities through mergers and
halved the numbers of government service centres by transitioning them to digital platforms
online.
Direct Controls or Regulations
UAE public authorities have been taking restrictive action to protect the safety and wellbeing of
the different citizens, residents and visitors. The country is trying to have the support of the
county citizens having national and resident abroad. They are helping in providing humanitarian
assistance to the other countries to help out the containing the spread of COVID 19 pandemic.
The country is looking to have the mandatory test for all inbound and transit passengers,
including Emiratis, residents, and tourists, arriving via the UAE's airports, irrespective of the
countries they are coming from.
Patents and Law of Tort
The country has an important level of updates for the UAE by allowing the temporary
suspension on issues on visas arrival holders of the exempted passports as part of the
precautionary and preventive measure adopted by the country containing the spread COVID 19.
The country is trying to have clear adaptation of prioritising health during the pandemic. There
have been a number of flexibilities which are widespread agreement which can be applied to the
government. This will be helpful in ensuring all IP rights to don’t have the country's innovation
and advisability of health technologies required for responding to the COVID 19 situation.
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Subsidy Policy
As the subsidy policy the Federal Authority for Identity and Citizenship (ICA) and National
Emergency Crisis and Disaster Management Authority (NCEMA) have launched the second
phase of the UAE Resident Return Programme. This has led to the country doesn’t having to
wait for approval and return to nations but all the travellers have the need to take the compulsory
COVID test as mandatory PCR. In addition, the UAE and Israel have agreed to make the
establishment of full diplomatic ties as part of the COVID negotiation.
Tax Policy
The country has announced a tax measure by announcing the three-month period to ease the
effect of the global economic trends and effect of pandemic. Tax and customers have measures
announced by the government that have taxpayer kind of relief. This has the extending level of
deadlines for the rolling for tax, deferral tax payments, the provision for the after-tax refunds,
more level of generous loss offset provisions which have the inclusion of the social security
contributions, payroll taxes or property taxes.
Foreign Exchange Policy
As the foreign exchange policy, the country is having to slow down the government projects to
reduce the finances. This is considered to be strict and legal actions as the part of painful
measure with the economic impact of the coronavirus pandemic. There will be a reduction in
budget expenditure sharply as it has the need to be more disciplined. Saudi Arabia's central bank
foreign expenses reserves fell in March as asset rates in the last 20 years hit the lowest level in
2011.
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Break-even point for the Abner corporation.
Profit + fixed cost / selling price – variable cost
a. Profit = Sales - Total cost
Total cost = Fixed cost + Variable cost
profit: $10,000;
Sales: X
Fixed Cost: $5,000
Variable cost: $100*X
10,000= Sales (300 * X) - [5000 + 100 * X]
10,000=300X – 5,000 -100X
10,000 + 5,000= 300X – 100X
X=15,000/200=75 TVs
b
profit: $10,000;
Sales: X
Fixed Cost: $5,000
Variable cost: $100*X
10,000= Sales (350 * X) - [5000 + 100 * X]
10,000=350X – 5,000 -100X
10,000 + 5,000= 350X – 100X
X=15,000/250=60 TVs
c profit: $10,000;
Sales: X
Fixed Cost: $5,000
Variable cost: $85*X
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10,000= Sales (350 * X) - [5000 + 85 * X]
10,000=350X – 5,000 -85X
10,000 + 5,000= 350X – 85X
X=15,000/265=57 TVs
In the situation, the company tend to have the selling of the 75, 60 and 57 units respectably to
earn 5000 profit per months as change in variation in variables price.
Factor that cause in the increase in demand and supply.
Reduction in the prices
The decrease in the demand of the product will be happening in situation when there is increase
in demand of product.
Taste and Preferences of The Consumers
The consumer has the taste and preference are greater as the demand has larger curves and lies to
a higher level. The taste preferences of version goods often change.
Income of The People
The greater the importance of the people the greater will be demand as it makes the increase in
terms of purchasing of power. The income of people increases by creating the positive impact
on the demand of goods.
Change in Price of Related Goods
There is an effect with price of goods especially which one are rated to goods in way of
complementary or substitute goods.
Population change
There is the ang in the population will definitely affect the demand of the product. More females
in population will increase the demand of cosmetic will increase.
Income of consumer
The credulity and income of consumer rise, there will be increase in budget and expenditure
ration of people.
Substitution effect
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the variability of substituted product will availed in t market. The demand of the product
will decrease with decrease the price of the substitute goods. As the demand of coffee will
decrease with decrease in price of tea.
Trends and Custom
This is the important fact as their public attention will increase the demand in positive and
negative manner.
Advertising
More advertising will lead to have development of product in evoke set of costumers
which will increase the demand.
Increase in Future Expectation
A product's demand increases when people anticipate an increase in its price in the future.
Increase in Consumer.
The increase in particular segment will accept and increased the differed product
Factor to be analysed for airline tickets and sweet corn during the month of heaviest
consumption
The airline ticket has the establishment of inverse relationship as the ticket has the fluctuation in
the hundreds of dollars from day to day along with predicting to change can there seems virtually
impossible. there is the sense of logic of changes by determining shift as to difficulty where the
lowest dares will be advisable. This has been looking at the version factor as last-minute tickets
along with looking in terms of destination popularity. There instar to be identified as filled
capacity and term in having the flight closures. this will be suspecting the flights.
On the other hand, in term of the sweet corn the heaviest mother, the supply of the corn have the
increase at the fast level as comparative to the demand which lead to have fall in equilibrium and
make the price fall as compare to below.2
2 So what impact will Covid-19 have on UAE property markets? [online ]
< https://www.arabianbusiness.com/news/443359-so-what-impact-will-covid-19-have-on-uae-property-markets>
Sethi, A., 2017. Factors Responsible for Mismatch between Demand and Supply of Requisite Skill in India.
IJARIIE-ISSN (O)-2395-4396, 3(3).
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Lincon company
output
total
cost
Total Fixed
cost
Total Variable
cost
Average Fixed
cost
Average Variable
cost
0 50 50 0 0 0
1 75 50 25 50 25
2 100 50 50 25 25
3 120 50 70 16.77 23.33
4 135 50 85 12.5 21.25
5 150 50 100 10 20
6 190 50 140 8.33 23.33
7 260 50 210 7.14 30
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Externalities and Air Transport
Externalities have been conducted as the side effects for their part of consequences of an
industrial or commercial activity. This has been affecting other parties as being without being
reflected as the cost of goods or the service tends to be measuredly involved. The airline industry
activities have resulted in ways of externa effects that are affecting the no bearing of force of the
ticket in perfect manner. This will have the conscious level of decision to travel not by air.
Advantages
 Increased in the sales
Increase in the business report by 70 % along with aviation industry expansion
 Supply chain efficiency
 There is a need to be balanced by the environmental consequences of air travel. The
Government believes that simply building more and more capacity to meet demand is not
a sustainable way forward.
 Social benefits
 At the global level, the government will play a major role in pressing for new solutions
and stronger action by International bodies. And the White paper sets out proposals to
bring aviation within the European Union emissions trading scheme, to help limit the
greenhouse gas emissions
As the report the air travel the increase by 5-fold over the past 30 years which is dreamed as
projected the between two ad three times as current level by 2030.
High cost - air travels is very high compare to sea travel
Opportunity cost
There is providing the additional capacity which is significantly damaged in change of economy
and national propensity.
Environments cost
There is a need to have balance in regards to the environmental crisis and consequence of air
travel. As the part of the positive impact as the national and regional economic propensity.
High taxes there is high taxes due to leisure activities sector.
On the other hand, providing greater certainty has all concerned in planning their future airport
capacity. But on the other hand, there is scoffingly to have flexible resignation by adopting the
uncertainties in heart to the long-term planning in a perfect manner. At the global level, the
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government will play a major role in pressing for new solutions and stronger action by
International bodies.
CONCLUSION
From the above file , it can be concluded as . This pandemic situation has set the world economy
to be prepared for the deepening crisis. The country and firm are facing major issues due to the
hitting of pandemic on supplier performances which is creating globally significant delays to the
freight deliveries as well as weaker export demand. This has been imposed with the reduction in
salary as per the temporary and permanent basis to reduce the salaries of the employees with
agreements of employees. In such circumstances it is understood that the contract appendix to
reduce the employee's salary as mentioned above should be completed
This is considered to be strict and legal actions as the part of painful measure with the economic
impact of the coronavirus pandemic. There instar to be identified as filled capacity and term in
having the flight closures. this will be suspecting the flights. There is providing the additional
capacity which is significantly damaged in change of economy and national propensity.
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