Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / Under the premise of avoiding risks, use economic arguments to justify the investment portfolio in the pharmaceutical and food industries during the epidemic

Under the premise of avoiding risks, use economic arguments to justify the investment portfolio in the pharmaceutical and food industries during the epidemic

Economics

Under the premise of avoiding risks, use economic arguments to justify the investment portfolio in the pharmaceutical and food industries during the epidemic. Special attention should be paid to the impact of people's risk aversion on their financial investment decisions.

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

 When we talk about risk aversion in investment,we look forward to less volatile and stable financial investments,investments which may not be very rewarding but are highly unlikely to crash in value,now during epidemic when we talk about such investments two sectors come into mind,food and pharmaceutical industries,let us see why from some of the economic view points,first is demand and supply,during epidemic people will cut spending but food and medicines cannot be curtailed beyond a limit,add to that over storage,which we saw in recent pandemic as people over stocked food fearing lockdowns and uncertainitymeaning demand in such times would increase leading to more prices and profits for company,similarly pharmceutical companies 's demand will not fall and they are the best hopes for finding solution to epidemic,so there value will also not crash,another way took at is through marginal rate of substitution,where people would most likely to substitute some of the goods for food and medicines leading to further funds flowing towards these two industries,so trade-offs will move in favor of these industries,we have talked about pre part where epidemic is starting,another area is its peak when jobs are lost and people face their purchasing power going down,at that time further funds are flown towards these industries,finally once the pandemic is over,these industries will not face any substantial decrease in demand as still most of these requirements will continue,w have looked at it from different stages of epidemic using different economic concepts,finally we can view it from costs theory ,for every other industry restrictions would mean more costs or downsizing but not for these 2 industries which means cost to setup and reach again at same levels for these industries is 0 which is not the case with other industries making these two least risky industries for investment.