Assume that the market for timber is perfectly competitive.

(a) Some of the world's biggest timber mills shut down because of COVID-19 restrictions. Using a supply and demand diagram explain how this event may affect the market equilibrium price and quantity of timber.

(b) During the COVID-19 pandemic, many people work from home and therefore need to build or improve their home offices. Using a supply and demand diagram explain how this event may affect the market equilibrium price and quantity of timber.

Read the extract (Extract 1) about GDP from an article and then do an essay that addresses the following:

(a) Describe how Gross Domestic Product (GDP) is measured using the expenditure method.

(b) Reflecting on the arguments made in the article and the module materials, discuss three activities or aspects of well-being that GDP does not measure.

(c) Briefly outline two reasons for why GDP is still regularly used in economic analysis despite its shortcomings.

Extract 1: Bobby Kennedy was right: GDP is a poor measure of a nation's health ... There are not many memorable speeches about gross domestic product, but that may be because the one made by Bobby Kennedy while on the campaign trail in 1968 said it all. As Kennedy pointed out, the production of napalm and nuclear warheads counted towards GDP, but the health of American children and the joy of their play did not. "It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country. It measures everything in short, except that which makes life worthwhile. And it can tell us everything about America except why we are proud that we are Americans." Those words were true in 1968 and they resonate even more strongly today. Measured by GDP, the US is the world's richest country. Measured by GDP per head, it is one of the richest. Measured in other ways, in life expectancy for example, the US would be a long way down the international league tables. And as recent events have shown all too clearly, it is not a country at ease with itself. ... GDP measures those activities for which money changes hands or for which a monetary value can be attached. Paid childcare is included, but unpaid childcare by family members or friends isn't. If the NHS needed to do more operations because Britain was becoming a less healthy nation, that would add to GDP. If the number of operations went down because the public exercised more, it would reduce GDP. ... But as a purely quantitative measure, the GDP figures tell us nothing about the quality of growth. To take one example, retail sales are now higher than they were before the pandemic started even though non-essential stores have been shut on PART 1 Question 1 Question 2 and off for much of the past year. We know that spending has migrated from the high street and retail parks to online; what we don't know is whether the goods being delivered by courier are really wanted or whether people are so miserable that they are binge-buying. ... The collapse in GDP is huge, but - unless there are fresh waves of the pandemic - only temporary. Once the restrictions are lifted, activity will pick up. If things go well, all the ground lost in 2020 will be made up by 2022. But how do you measure the impact of the schools being shut on the life chances of a child from a disadvantaged family? What price the toll on mental health of people confined to their homes and unable to see friends and family for months on end? Is it possible to put a monetary value on loneliness and depression? The fact that in recent years statisticians have tried to judge progress in different ways speaks volumes about the limitations of GDP as a yardstick. There are things that can be easily measured and things that can't. The fact that GDP fell by 10% last year tells us something, but not everything. Reference: Elliott, L. (2021) Bobby Kennedy was right: GDP is a poor measure of a nation's health. The Guardian. Available at: https://www.theguardian.com/business/2021/jan/17/bobby-kennedy-was-right-gdp-isa-poor-measure-of-a-nations-health [Accessed: 21 February 2022]