Price :

It's a fundamental economic principle that when supply exceeds demand for a good or
service, prices fall. When demand exceeds supply, prices tend to rise.
There is an inverse relationship between the supply and prices of goods and services when
demand is unchanged. If there is an increase in supply for goods and services while demand
remains the same, prices tend to fall to a lower equilibrium price and a higher equilibrium
quantity of goods and services. If there is a decrease in supply of goods and services while
demand remains the same, prices tend to rise to a higher equilibrium price and a lower
quantity of goods and services.

In a sentence, low supply and high demand increase price and vice versa.

In this diagram, we have rising demand (D1 to D2) but also a fall in supply. The effect is to
cause a large rise in price.
Impact on Price of Face mask due to Covid-19

Global Perspective

As the coronovirus scare rises, masks and sanitizers have seen a sudden rise in demand
jacking up their prices and were also becoming short in supply globally

According to the new report, global sales of surgical masks and respirators will exceed
pre-pandemic estimates for these products by 211% and 305%, respectively. In 2020,
global sales of surgical masks and respirators are projected to reach between $8.0 and
$10.7 billion, depending on how the virus spreads. A massive increase in demand for these
products, coupled with unit shortages, have caused average sale prices to increase by as
much as 4X

Table : Price surge before and after covid-19 situation

Item Before After

100 generic blue $4.21 $19.99

disposable masks,
(package)

10 N95 respirators $18.20 $99.99

( Package)

Source: Keepa: Amazon Price Tracker

According to the Director General of the World Health Organization (WHO) , Demand is

up to 100 times higher than normal and prices are up to 20 times higher.
At the end of January, this 100-count pack of disposable three-layer masks  was priced at
$4.21 on Amazon, according to Keepa, which tracks price changes on the website the set of
masks has nearly quintupled in price, selling for $19.99 currently.
This set of 10 N95 respirators was $18.20 in mid-January. It’s currently sold out after spiking
to $99.99 .
Bangladesh Perspective

The detection of coronavirus in Bangladesh has triggered a panic buying of face masks,
pushing up their prices also

The business of face mask has taken an upturn of late in the local market amid growing
concern over coronavirus outbreak as people are out to stave off any threat emanating from
the deadly virus.

According to the Drug traders in Bangladesh Supply is low due to increasing demand. The
daily demand at their shop is 5-10 boxes but they cannot sell the item because of the shortage
in the wholesale market.

Item Before After

50 packets of single-use 80–100 tk 350–500 tk

masks

Earlier they would buy 50 packets of single-use masks at Tk 80–100, but the price had gone
up to Tk 350–450. They claimed that as the supply was inadequate to meet the demand, the
masks could not be retailed for less than Tk 15–30 each.

Diagram: Supply, Demand & Price fluctuation due to Covid-19

So it is evident that due to the pandemic the demand for face mask accelerated significantly
on sudden time, which caused supply to become constrained. But, the price to be higher.