COURSE: BUSINESS ECONOMICS

PROJECT: COVID-19: The Global Shutdown

Instructions for the submission:
● Please maintain the following: Font - Times New Roman, Font Size - 12, Line Spacing -
1.5

Name Hoang Thuan Nguyen

Question 1

In May 2020, OPEC decided to cut the oil supply because the global demand was decreased
significantly during Covid-19 pandemic. So that, the price of oil also has decreased
drastically. The desired outcome by cutting the oil supply is the protection the oil market and
the stability for the price of oil. From this decision, the demand curve will move to the right,
the supply curve will move to the left, the subsequent market equilibrium will move to the
higher price point. Before the decision, the supply is high, demand is low, the equilibrium was
at the low price. After the decision, the supply is lower, the demand increased, the equilibrium
was at the higher price.

The oligopoly structure is the OPEC’s market structure. The three features are: 1/ Just a few
large firms that dominate the market. 2/ The product can be identical. 3/ Entry into the
industry is restricted.

Question 2

The business producing was from 84 to 92 articles per month. Total profit: €2500. To find-out
the profit maximizing, we must estimate the total cost and the revenue of each level and decide
the number of journalists based on the needed amount of articles (output) to get the best profit.
 For the profit maximizing, I must fire from 38 to 42 journalists. The new profit is -6500€. I
have to fire journalists due to the market demand was decreased during lockdown period, but
the fixed cost was maintained, the only way to reduce the lost is decreasing variable cost
(journalist’s wage).

Question 3

Cyclical unemployment. During pandanemic and lockdown period, the demand of a lot of
industries fallen down (Ex: tourist, entertainment). Moreover, when lockdown policy applied,
a lot of factories must be closed, due to that situation, the firms must try to shrink their
business and reduce variable cost (Ex: employee’s salary), they must fire employees to
maintain the revenue.

Supply-led recession. When the Government apply lockdown policy, the factories must be
closed, it leads to the lack of production although the demand is still high.

Question 4

The Government should enforce expansionary fiscal policy in order to stimulate the economy
and aggregate the demand.

The Reserve Bank of India should use quantitative easing to help lower interest rate and boost
economy activities.