With the virus hitting as hard as it can right now, there are many economic impacts that I am sure we have all talked about at some point. What I am going to talk about today is the effects on small, family shops. Many stores function on a sort of "paycheck to paycheck" style of business, where the total revenue is barley greater than the implicit and explicit costs combined. With the current epidemic, places are closing, getting no revenue, while also spending very little to nothing to keep the place able to re open.
In this time, stores now have no revenue, as they are closed, and no explicit costs as, well, they are closed. But the explicit costs still remain, where they have to pay rent, taxes, and buy things that they need for their own homes. So they will have a smaller expenses burning away at what they have saved up, which could be a lot, so they will reopen, but they also might not have much, and there is a good change that many stores wont open up again.
https://www.forbes.com/sites/danestangler/2020/03/17/how-do-we-help-small-business-during-covid-19-crisis/#692bbdf61b7d
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These times are very difficult for small businesses especially. One thing they can consider, although it is not ideal, it trying to find a loophole in the government's regulations in order to cover their explicit costs. For example, Chef Chu's (and many other businesses) have begun to have a curbside pickup business model. People can phone in their order and as soon as they arrive to Chef Chu's they are greeted by people in masks and gloves ready to take their card and give them their food in exchange. Even with these new business shifts, we need to think about the opportunity costs in these times. Even though workers are wearing gloves and masks, their opportunity cost of working is that they could've been at home safe with family. In this difficult times, it is hard to make decisions on what is the best option for individuals personally.
ReplyDeleteThe opportunity costs as Mia mentioned is what differs between some small businesses who have decided to close, and some who have decided to remain open. Some businesses have decided that it is not worth it, and would rather close, while many businesses still remain open for delivery or take-out. While it is difficult to hear that small businesses are suffering, the government is stepping in to help during these times. The $2 trillion package was passed today to help those in need. However, this package won't be in effect for another few months, leaving many small businesses in a time of hardship.
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