Answer to Question #133237 in Microeconomics for jeshmita

Question

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 you to prepare a short essay report that explains
the various repercussions of higher construction materials prices. In your essay:
a) Use a relevant diagram to show and discuss the impact of rising construction materials prices
with the context of domestic property market.
b) Examine the impact on:
 housing affordability;
 profitability of real estate companies;
 sales commissions earned by real estate agents.
c) Discuss briefly two policy options to address some of the undesirable implications of higher
construction materials price

Answer 1

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