ECO 605 Discussion 4.1: Changing Demand, Supply, and Equilibrium
ECO 605 Discussion 4.1: Changing Demand, Supply, and Equilibrium
Discussion 4.1
The example used will be surgical masks.
Four factors can influence the demand curve; A change in income, the price of related goods, tastes, and expectations. When income increases, the demand for the single use surgical masks would increase. When income decreases, the demand for surgical masks will decrease because buyers will want reusable masks. Another factor that could shift the demand for surgical masks is if there was a massive shipment of them that arrived in an area. If every person had an ample stockpile of surgical masks and there were still many for sale on the market, then the demand for the surgical masks would decrease. The surgical mask prices would be cheaper and fewer buyers would want cloth masks or other related products. If everyone’s stockpile of surgical masks was running low and there were very few for sale on the market, then the demand for the surgical masks would increase. The demand for substitutes like cloth masks would decrease. If a buyer believes they may come in contact with someone who is Covid-19 positive, then they may prefer a surgical mask over a cheaper, less effective substitute. A factor that could increase the demand for surgical masks would be if a new Covid-19 variant was expected. More people will be wanting to purchase surgical masks. A factor that could decrease the demand for surgical masks would be if “herd immunity” was achieved and the spread of Covid-19 was expected to decreased drastically. The demand for surgical masks would decrease because they are no longer needed.
A change in the resource prices will affect the supply of the product. An increase in the resource price will decrease the supply of the product (Hicks, 2021). Majority of the surgical masks that healthcare workers wear are made of a non-woven fabric product. If there was to be a shortage of this non-woven fabric or a decrease of suppliers for this material, the price of the material would increase, resulting in fewer surgical masks produced. There would be a decreased supply of surgical masks. A decrease in capital stock will also decrease the supply (Hicks, 2021). At the factories where surgical masks are made and packaged, if there was a decrease in capital stock, such as workers, then there would be fewer or no surgical masks produced and shipped out. Therefore, the supply of masks would decrease.
Reference
Hicks, L. L. (2021). Economics of Health and Medical Care. Jones & Bartlett Learning.
The example you give of surgical masks is great for the times. The pandemic has driven up both the supply of surgical masks and the demand. Moreover, healthcare workers’ demand for surgical masks has grown exponentially. When demand increases, the equilibrium price will rise (Hicks, 2021). Factors such as universal masking for a population will cause an increase in demand which will drive up the equilibrium price for surgical masks (Goel & Haruna, 2021). When an area has a strict mandate in effect the equilibrium price will increase due to supply constraints to meet the masking mandate. After a mandate when supply has recovered there can still be a consumer surplus which can also increase the equilibrium price on a smaller scale.
Goel, R. K., & Haruna, S. (2021). Unmasking the demand for masks: Analytics of mandating coronavirus masks. Metroeconomica.
Hicks, L. (2021). Economics of health and medical care. Jones & Bartlett Publishers.
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Thank you for giving us a great example from this assignment. I agree with your discussion that fewer surgical masks are produced because newer or more sophisticated masks are produced. The consumers ‘ taste and preference are one factor that will change in demand that will affect surgical mask equilibrium price or equilibrium quantity. Consumers prefer masks that have designs or are non-disposable, for example. If the consumers’ taste changes against the product, the demand decreases like the surgical masks, then according to (Hicks, 2021), the equilibrium for both price and quantity will fall.
Reference:
Hicks, L. L. (2021). Economics of Health and Medical Care. Jones & Bartlett Learning.
Surgical mask is a great example that you provided for the discussion post. Especially during Covid-19 pandemic, the demand for the masks has increased drastically. Its a very good point that if there is another new variant of corona virus, the demand for the masks will increase again. Definitely, if there is a substitute for surgical masks which has more benefits and better price , the curve will shift (Hicks, 2021). You have given great points that can affect the supply of the masks. Another factor that can affect the supply is also the government regulations. If the government makes it mandatory to wear mask, it will increase the number of buyers in the market. This will increase the supply of the product too.
Hicks, L. (2021). Economics of health and medical care. Jones & Bartlett Publishers
Hi Gavin! I enjoy your example of surgical masks as I feel its very applicable at this time given the increased demand for personal protective equipment related to COVID-19. Numerous things could affect the supply of surgical masks, I’m going to focus on change in price of resources required to produce. Per our videos, increased cost of resources required to produce will decrease supply and the inverse, decrease in cost of resources will increase supply. Qe is affected by decrease in cost to produce and increase in supply because the cost of the product is usually lower. Therefore, the quantity produced is greater output at lesser cost, and the consumer is more willing to by at the lesser cost increasing demand as well. Thanks for sharing!
Several factors can influence market demand for goods. Cervical cancer screenings are a very important part of women’s health. One factor that has shifted market demand has been the cost of this screening to women without insurance or are who underinsured. This screening can cost upwards of $500. This can be a barrier to the quality care women deserve (Sawaya et al., 2019). Another factor that can prevent women from going to their doctor can be a change to their income, perhaps they lost their job or hours were reduced. With covid, there was a massive shift of women out of the workplace. People tend to put off seemingly routine or unnecessary tests when they can’t afford them. Another factor that influences demand is the increase or decrease in the consumers. The US has an aging population and more women are turning 74 which puts them outside of the recommended age for routine screenings. Expectations can also influence the number of cervical cancer screenings completed. Many women find this to be an unpleasant experience (Sundstrom et al., 2018). Patients often try to avoid unpleasant experiences.
A recent change in the ASCCP guidelines can cause a shift in supply for cervical cancer screenings. These screenings used to be annual, but they moved to every 3 years. This reduction in screenings required reduces the number of screenings that are ordered each year. Factor prices and availability is another factor that can affect supply (Hicks, 2021). If there are fewer tests produced, less with be available to the consumer. With the reduction in workforce, reduced labor, and the rising cost of inputs, there might be fewer tests available in the market (Sawaya et al., 2019). Transportation of the tests to the various medical facilities can also influence supply. The dramatic changes in weather combined with the labor shortage can contribute to the rise in these costs, which can then cause supply problems.
Hicks, L. (2021). Economics of health and medical care. Jones & Bartlett Publishers.
Sawaya, G. F., Sanstead, E., Alarid-Escudero, F., Smith-McCune, K., Gregorich, S. E., Silverberg, M. J., … & Kulasingam, S. (2019). Estimated quality of life and economic outcomes associated with 12 cervical cancer screening strategies: a cost-effectiveness analysis. JAMA internal medicine, 179(7), 867-878.
Sundstrom, B., Brandt, H. M., Gray, L., & Pierce, J. Y. (2018). It’s my time: applying the health belief model to prevent cervical cancer among college-age women. Journal of Communication Management.
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