This is a 'take-home' exercise worth 30%, consisting of short-written answers. The 'economics principles exercise' (EPE) is based on BLAW1002 lectures/modules E1 (M6), E2 (M7), and E3 (M8). Assessment and marking guidance shall be made available on Blackboard (Bb) from 3:00pm (Perth, AWST), Tuesday 20th April 2021. You will have up to 17 days to complete the exercise on your own. The EPE is to be submitted via Turnitin in an editable Word Document (or PDF) by the due date:

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 and the following: your Full Name, Student ID as a title in the Word document when submitting your work to Turnitin (see Assessments tab on Bb). N.B. file size for uploading to Turnitin cannot exceed 20MB.

• The suggested word count is a maximum. The main thing is that you just answer the question and have sufficient explanations.
• For more information, see the PDF on Bb, "Marking Guide and FAQs for BLAW1002 S1 2021 Economic Exercise Qs".

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:

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/

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).