Assume you work as an economist at Ministry of Housing. Assume that following supply-side disruptions due to COVID-19 pandemic, construction materials (for example, steel and timber) prices go up around the world (including in Fiji). The Director Housing has asked to write a short report that explains the various repercussions of higher construction materials prices.

Questions

1. Examine the impact on profitability of real estate companies
2. the impact on sales commissions earned by real estate agents
3. Discuss briefly two policy options to address some of the undesirable implications of higher construction materials prices.