Just Question 2 please

This is a 'take-home' exercise worth 30%, consisting of short-written answers. The 'economics principles exercise' (EPE)

The EPE consists of one section with two (2) compulsory short written answers, with various parts to be answered: Question 1 is worth 20 marks; and Question 2 is worth 10 marks.

Just include the answers to the questions

In summary, all two (2) questions have to be answered using well-labelled, hand-drawn diagrams, with accuracy and sufficient explanations. In your answers, refer to key economic concepts taught in E1 to E3 in BLAW1002 S1 2021, where relevant.

Q2. The Market for Lumber and Housing in the US (E3) [10 marks]

There has been a strong increase in global demand for building materials (especially timber) from mid-2020 to 2021, which has led to delays on various construction sites such as in Australia, France, the US. Read the following articles (and links within) and then answer the question below:

Use the demand and supply (D&S) model to demonstrate the change in the market conditions from 2019 to 2021 for the lumber market and the housing market in the US. Use two separate D&S diagrams, and carefully label the curves and clearly indicate all equilibrium prices (and quantities).

Regarding Q2, there is no need to calculate per se the price elasticity of supply (PES), but you may wish to discuss (and illustrate) PES determinants for students who want to work on a high-standard extended answer. You should not need to do exact copy/snapshot of a diagram from the unit materials - - as this is an applied activity -- a diagram may closely resemble something from the materials, but it is unlikely to be an exact match.

1.Sheffey, Ayelet and Libertina Brandt (2021) "Lumber prices are so high that many builders are holding back on construction" Business Insider, March 26, available online: https://www.businessinsider.com.au/why-is-lumber-so-expensive-homebuilding-real-estate-newbuild-inventory-2021-3

2.Lambert, Lance (2021) "Lumber prices are up a staggering 188%when will the wood shortage end?", Fortune, March 20, available online: https://fortune.com/2021/03/20/lumber-prices-2021-chart-when-will-wood-shortage-end-price-of-lumber-go-down-home-sales-cost-update-march/

3.Subramanian, Samanth (2021) "The US wood shortage can be traced to a decades-old beetle infestation in Canada", Quartz, March 18, available online: https://qz.com/1985276/america-is-running-short-of-wood/