IMT Covid 19

Name Isha Singh
Question 1
The phenomenon of such joint decision-making is called Collusion. OPEC is work as a Cartel,
where a group of companies or firms that have agreed to work together to alter the output and
price of a product, this is the process of work or decision is known as collusion
Advantages-
Higher Production
High and sure profit
Low competition cost
Disadvantages-
Monopoly Impact
Low Stability
Inability to control demand
Due to the differences between Moscow and Riyadh about the production of oil, the oil prices
collapsed to a historical low, due to this Organization of the Petroleum Exporting Countries
(OPEC) decided to reduce the oil supply by 9.7 million barrels per day from May 2020.
OPEC's decision to cut off oil supplies caused demand to remain stable, so the demand curve
will shift right from its original position, further affecting the equilibrium point and causing the
new equilibrium price to be set at a higher level as compared to the previous equilibrium
position.
Whenever a market is not at equilibrium, economic pressure is applied to bring it closer to

price and quantity equilibrium via individual behaviors.
Stagflation also occurs in this situation, which indicates that inflation is increasing but output
and unemployment are decreasing.
OPEC operates on an Oligopoly market structure. In an Oligopoly market structure, many

players share the market. For this reason, the Oligopoly market structure is the most widely
recognized type of market structure. key features of Oligopoly market structures follow:-
Number of Firms:- Only a few large firms that dominate the market hold the major share in the
market.
The products can be either identical or highly differentiated. In the given case of OPEC Oil is
a Highly identical product to supply.
Difficult entry:- Due to the presence of strong players in the market, it is difficult for any new or
potential competitor to enter the market
Question 2
If business was running at maximum profit level output before COVID – 19
The business was producing 92 articles.
No. of Journalist = 8
The total profit was €2500.
In this case, marginal revenue curve is a horizontal line, So Marginal Revenue = Change in
quantity / Change in total revenue i.e., €375. If a company wishes to maximize its profits, the
marginal cost must equal the marginal revenue, which occurs only if the company meets the
above criteria.
Considering the given case, we must fire 6 to gain maximize the profit.
The new total profit would be €1500.

This will happen when Marginal cost (MC) = Marginal revenue (MR) and the company only
has 4 Journalists on board.
By increasing the number of journalists over 4 we would have MC > MR, which would result
in a reduction in overall profit. It will also cost more to create a new article than the revenue
expected.
Question 3
It is most common for a country such as India to suffer from cyclical unemployment during
such a pandemic, which is the result of the economy going into contraction, i.e., a drop in
GDP or a recession.
In other words, cyclical unemployment can be called deficient-demand unemployment In

India, the economy will suffer from a decline in aggregate demand caused by the economic
downturn. As a result of the lockdown which is happened during this pandemic, goods and
services have been reduced, which has further led to a decrease in production.
Initially, during such a Pandemic, there would be a supply-led recession, followed by a

demand-led recession. Currently, numerous countries are dealing with multiple crises,
including a health crisis, a financial crisis, and a decline in commodity prices. As a result,
demand has additionally fallen. As a result of social distancing techniques and concern of
infection, people's motivation to use such services when they are open for commercial
enterprise has additionally dropped. Job losses limit people's capability to spend and worry
about the future causing households and organizations to postpone purchases till the trouble
is handled. We are seeing predominant losses of output given that demand in Businesses
has sharply declined. Suppliers are consequently slicing on manpower which is further
inflicting unemployment.
Effect of cyclical unemployment and recession on aggregate demand and supply in India.
Aggregate supply will fall as people stay home due to unemployment or movement
restrictions.
AD/AS model is mainly used by Economist to verify the inflation rate, recession, and
unemployment
In an extremely negative demand shock situation, the AD line i.e., the Aggregate demand
line moves left and downward. This is explained by the AD-AS model.
When a negative supply shock occurs, the AS line moves up and to the left. If the demand
curve remains constant, then output falls and prices and costs increase.
Question 4
Should adopt a Fiscal Policy in Macroeconomics. The main measures of Fiscal Policy are as
follows,
The government uses fiscal policy to maintain the economy during business cycles by
engaging in spending, taxation, and borrowing. Simply put, fiscal policy refers to the
processes used by the government to tide over the economy.
As per the GDP [(C + I + G + (X - M)], where G stands for Government spending, GDP is
positively impacted by increases in government spending, while GDP is negatively impacted
by decreases in government spending.
Fiscal policies are of two types, namely Expansionary fiscal policy and contractionary fiscal
policy.
During recessions and periods of slow economic activity, the government should pursue an
Expansionary fiscal policy to stimulate the economy.
Monetary policy is used to influence consumer and business decisions on savings,

investment, and spending.
Should achieve its objective by Regulating money supply and Regulating interest rates.
policy in Macroeconomics to regulate the economy

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Name Isha Singh

High and sure profit

Low competition cost

Inability to control demand

Whenever a market is not at equilibrium, economic pressure is applied to bring it closer to

OPEC operates on an Oligopoly market structure. In an Oligopoly market structure, many

If business was running at maximum profit level output before COVID – 19

The business was producing 92 articles.

The total profit was €2500.

The new total profit would be €1500.

In other words, cyclical unemployment can be called deficient-demand unemployment In

Initially, during such a Pandemic, there would be a supply-led recession, followed by a

Monetary policy is used to influence consumer and business decisions on savings,

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