ECON101 Principles of Microeconomics

Real-World Assignment

Will Wright and Giulia McDonnell Nieto del Rio. A New Covid-19 Dilemma: What to Do When Vaccine Supply Exceeds Demand? https://www.nytimes.com/2021/05/09/us/covid-vaccine-surplus.html. This article examines the dilemma of what should be done when Covid-19 vaccine supply exceeds demand. The article asserts that several states were desperate to acquire as many doses as possible. Still, they now have unused doses of the vaccines as demand declines and supply continues to increase. The Federal government shipped 329 million doses to states, and only 257 million have been used. This has left the states with surpluses and devising ways to find people to vaccinate. At the same time, telling the federal government to limit supply. States are coming up with ways such as developing ways to vaccinate the hard-to-reach population or those who are hesitant or cut on supply. However, 43% of Americans are yet to receive the vaccine as of Saturday, May 8, 2021. The article postulates that a decline in demand was expected. It explains at the initial stage; appointments were coveted and hard to find. With time, this has changed, and the vaccines are readily available, making the officials target the groups that have missed vaccines for various reasons.

Based on the information provided in the textbook, when supply exceeds demand, it creates a surplus. When the demand for a product is anticipated to be high, such products are produced in large masses, as seen in the case of Covid-19 vaccines. The mass production has seen the vaccines flock to the market, where people at first rushed for vaccines. However, some people are unwilling to take the vaccines, which has complicated the demand supply situation. The supply at the market was based on population demand, but some people are not ready to receive the vaccines, resulting in a surplus of vaccines in the market. From macroeconomic theory, when supply exceeds demand in a free market, then suppliers have to cut supply to the market to restore the equilibrium quantity supplied (Baldwin and Di Mauro 2020). This is the same thing that is happening to the states. Several states such as North Carolina have reduced their deliveries by 40%, Connecticut has only asked for 26% of its full delivery, and South Carolina has asked for only 21%.  Due to a fall in demand for Covid-19 vaccines, states are trying to restore equilibrium in various ways, such as cutting on the quantity ordered or stimulating demand in the population that is hesitant to receive the vaccination.

The surplus in supply should not exceed demand by a great margin, given that the ordering of vaccines was based on people in each state. The states should reach out to the public and determine why some people have not received the vaccines or are unwilling to receive them. Instead of cutting on the federal government supply to states to attain equilibrium, that will be at the cost of the people's lives. Therefore, the best way is to reach out to people and convince them to take the vaccinations. Based on this reasoning, even if there can be a surplus, it will not be to the extent of raising the alarm.

Reference

Baldwin, R. and Di Mauro, B.W., 2020. Economics in the time of COVID-19: A new eBook. VOX CEPR Policy Portal.

Will Wright and Giulia McDonnell Nieto del Rio. A New Covid-19 Dilemma: What to Do When Vaccine Supply Exceeds Demand? https://www.nytimes.com/2021/05/09/us/covid-vaccine-surplus.html

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