PANDEMIC (COVID-19) AND ITS EFFECT ON MICROECONOMY
The great impact of the virus COVID-19 on the entire world is pretty visible and in today's article, we are to focus on the impact it has had on the microeconomic part of the world economy.
Within the analysis, it is important to mention individual firm liquidity and preservation of the economic networks.
Each good standing firm is an important component of an economic body and if those are gone or number reduced it affects the economy in terms of great losses. It affects the economy in terms of supplies, demands wages, taxes, and so on.
It could be said that the main cause and effect of companies meeting unsatisfactory outcomes, during the pandemic crisis, was the traditional work scheme. In the majority of companies, work description would not include remote working but the opposite.
Here, we do not talk about companies not being developed and prepared but rather about the nature of jobs that offer services to customers like let us say Transportation Companies or Health Institutions not to mentioned many others, where the remote type of performance had not yet been familiar nor introduced.
Another issue that arises right after is a shortage in worker productivity as well as insufficient supplies and altogether it makes the main skeleton of the economy of small businesses less stable and reliable. In the chain reaction of all disturbances, the pandemic causes many companies to encounter a problem of inability to conduct payments to workers which further makes paying taxes even more difficult and overall obligations are not met.
The behavior of the economy during the pandemic shows several factors or changes that can be seen as a result of the pandemic (COVID-19) impact. First, the costs of the pandemic have shown to be enormous starting from a simple example of a need for face masks. As the need increased government had less and less impact on the market products that people were in great need for. Needs and supplies were interchangeably increasing and so did the price. As the situation got worse face masks were a kind of product that became a bare necessity and obligation not a matter of choice.
Demands, needs, and product prices were increasing rapidly which resulted in some people even engaging in the production of masks in the private sector. This economic behavior is described as Hummingbird Economics. This was how one part of the microeconomy of small businesses reflects on the pandemic or should cause and effect in this case be put another way around, but the hummingbird effect shows how each individual made a contribution on a private level to the overall economy of supplies and needs. The more people engaged the firmer the effect got.
While this can be seen as both positive and negative side pandemic had on the economy, services like travel entertainment and even manufacturing suffered a great loss because they were conditioned by restrictions that were made on people by lockdowns.
The success of prevailing the suffered loss, that was harsh but short-termed, managed to handle companies that were fast in transformation and catching up with the new market trends like for example remote teaching in schools. This means that even though pandemic brought negative impact whatsoever, in some cases, for example, shops that in a fast manner transferred and put focus on online shopping, managed to turn the situation in their favor. Similar example like the Hummingbird Economy, which serves as an example of positive rather than negative pandemic impact on the market.
BOOK: Foundations of Economics - Robin Bade, Michael Parkin,
50,51,60,68,70 ... 9780134486819