FACULTY OF HOTEL AND TOURISM MANAGEMENT

UNIVERSITY OF TECHNOLOGY MARA (UITM)

CAMPUS PUNCAK ALAM, SELANGOR

ECO560- ECONOMIC FOR HOSPITALITY MANAGEMENT.

GROUP ASSIGNMENT 1.1

PREPARED FOR
MADAM SALIZA BINTI SULAIMAN

FROM:
HM242 4A1/A2

NUR HAZIM TASNIM BIN ABDULLAH 2019424028

AHMAD HAZIQ BIN MOHD FATHI 2019228866
JASSPER BIN MADIUS 2019627694
 COVID-19 HAS BOTH POSITIVE AND NEGATIVE IMPACTS
Without a viable vaccine and therapy, the only available means to control the Covid-
19 spread is through our own discipline. The advice by the authorities is to avoid
close contact by avoiding crowded spaces, to practise good hygiene and to limit
movements to only getting essential items. This has been communicated through the
slogan "Just Stay At Home". Public health has been the biggest calamity. The
economy has also taken a big hit. Small businesses which thrive on daily incomes
have been badly shaken, especially owners of roadside stalls. With the Movement
Control Order (MCO), their meagre incomes have been completely locked out. Big
businesses have not been spared either.
Tourism and travel have been rattled. Many hotels now rely on the quarantine
programme for returning citizens, funded through the government's stimulus
package. Many airlines have already declared their situation as dire. Some have
already filed for bankruptcy. Thousands who work for the airline industry including
pilots have been made jobless. Cancellation of orders for new planes has also
affected Airbus and Boeing, the two major makers. It will undoubtedly have a domino
effect on the supply chain. In Malaysia, aerospace companies involved in the supply
chain face uncertainties. The commodities sector has also been impacted through a
slump in demand. Prices of palm oil and rubber have taken a dive. The oil and gas
sectors are also in dire straits mainly because of demand slump brought about by
reduced travel during this pandemic. Attempts by oil-producing nations to cut supply
have resulted in world oil price falling below US$20 per barrel. But the food and
medical sectors are positively impacted by the Covid-19 crisis. Medical equipment
makers are having a field day with the massive orders in place. Malaysian face mask
and glove manufacturers are benefiting too.
Others are not so lucky. Despite the rising demand of foodstuff, it has been reported
that vegetable farmers in Cameron Highlands have lost out due to logistical
problems. For a long time now, nature has suffered at the hands of our reckless
economic activities that often wrought havoc on the environment. However, with the
enforced lockdown throughout much of the world, there has been visible evidence of
recovery. Pictures of cleaner rivers and clear air have been shared on social media.
Covid-19 has reversed the fate of the environment for the better. It confirms the
scientific stand that Man is the culprit in the worsening river and air quality. It also
shows that nature can heal itself. The cessation of human activities during this
pandemic has therefore been a blessing to nature.

PROFESSOR DATUK DR AHMAD IBRAHIM

FELLOW ACADEMY OF SCIENCE
New Straits Times
Question 1
Based on the article above analyse the impact of Covid 19 on demand and supply towards the
economy in Malaysia.

The effect of Covid-19 on the demand and supply of the economy in Malaysia is
that small businesses growing with daily incomes have been shaken by a sharp decline and
their meagre incomes have been locked up and completely cut off. In addition, Tourism and
travel also have a very significant impact. Many hotels now rely on quarantine programs for
returning residents and those funded through government stimulus packages. Next, many
airlines state their situation is deteriorating. Some have been declared bankrupt. Thousands
working in the aviation industry including pilots were laid off and many were unemployed.
Aerospace companies involved in the supply chain have faced uncertainty. The commodity
sector was also affected by declining demand. Prices of palm oil and rubber also declined.
The oil and gas sector is experiencing difficulties mainly due to declining demand due to
declining travel during the outbreak. Attempts by oil-producing countries to reduce supply
have resulted in world oil prices falling. Food and medical sectors affected by Covid-19
crisis. Medical device manufacturers spend the day with great orders and demands.
Malaysian face mask and glove manufacturers also benefit. In addition, vegetable farmers in
the Cameron Highlands suffered huge losses due to logistical problems.
QUESTION 2

2.Using an appropriate diagram, explain the impact of decrease in tourist arrivals on the
market equilibrium of hotel industry in Malaysia.

FIGURE 1

Figure 1 show D is the initial demand curve and S is supply curve. The equilibrium price is
P0 and The equilibrium quantity is Q0

The impact of decrease in tourist arrivals make demand decrease and demand curve shift
to the left from D0 to D1. This also make supply decrease and supply curve shift to the left
from S0 to S1.

The news equilibrium shows news demand curve, D1 and supply curve S1. The equilibrium
price is P1 and Quantity is Q1.
Question 3

‘The oil and gas sectors are also in dire straits mainly because of demand slump brought
about by reduced travel during this pandemic.’ Explain the relationship between oil (petrol)
with travel. Use example and diagram to explain how these goods related.

Situation Price Quantity

A P2 Q2
B P1 Q1

Figure 1

The relationship between oil with the travel is price of goods. The price of the products
depends on the cost of production, which in turn will determine the quantity that will
purchased by the customer. The higher the price, the lower the demand.
From the figure 1 shows the price for oil and gas has for different situation,during
situation A during covid-19 is P2 and the price for situation B is P1. the price for oil and and
gas has decrease from P2 to P1 during covid-19. Meanwhile, the quantity demand for
situation A is Q2 and the quantity demand situation B is Q1. This means during the covid-19
quantity demand has increase from Q1 to Q2 eventhough people cannot to travel due to
Covid-19 but oil and gas is one of basic need.

Question 4
Why medical sectors are positively impacted by the Covid-19 crisis? If the medical product
falls under perfectly inelastic, explain your answer by using diagram.

Medical sectors are positively impacted by the Covid-19 is because medical sectors are
perfectly inelastic demand. Perfectly inelastic demand is a condition in which the quantity
demanded does not change as the price changed.

Figure 1 shows when the price of medical sectors increases by 10%, the quantity
demanded remains the same because medical sectors are important sectors during this Covid-
19, and patience cannot change based on the price. The other example Oxigen tank important
for the covid-19 patient to use when they have been positive, so even though the price of
oxygen tank has been increasing people cannot change the user of oxygen tank based on the
price.
Question 5
Malaysian face mask and glove manufacturers are benefiting too. The raise in demand for
face mask lead the Malaysian government to set the price ceiling for face mask to RM1.20.
Draw the diagram to show this situation and explain why government set the price ceiling.

Figure 1

Figure 1 shows D is the initial demand curve and S is the supply curve. The
equilibrium price is Rm2.50 and The equilibrium quantity is Q0 units.

The rise in demand for face masks leads the Malaysian government to set the
price ceiling for a face mask to RM1.20. Due to the price ceiling at Rm1.20, quantity
demand increase from Q0 unit to Q1 unit meanwhile Quantity supply decrease from Q0 unit
to Q1 unit. As a ceiling price is below the equilibrium price, shortage happened from around
Q1 unit to Q2 unit.

Thus, at the price of RM1.20, the buyer will compete among themselves to get a
limited quantity, and suppliers will reduce their production in face masks due to the lower
price. It makes some consumers will be willing to pay more to get the product. It will
increase the price from RM1.20 to RM2.50. the quantity demand will decrease and quantity
will get increased.