1. When the SARS outbreak started in mid March 2003 and the disease quickly spread to the community, prices of surgical masks surged to a record high level. Despite the continual spread of the disease within the community at the beginning of April and more citizens are wearing masks, the prices of masks come down substantially. Explain this economic phenomenon with the aid of a demand-supply diagram.    (The following photos show recent changes in the prices of masks. Click on the photos to see the prices more clearly.)

         

12 - 4 - 2003                               15 - 4 - 2003                                     15 - 4 - 2003

   

  1. Explain the market structure of the surgical masks market.

 

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