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Demand For Housing Assignment Paper
Reality Check! Read the Fiji Sun newspaper article extract below and answer the questions that follow: Demand For Housing Continues To Increase Says Qereqeretabua (by Jone Salusalu 17 Feb 2023 ) Demand for housing continues to increase while the supply has not been enough to meet it. Assistant Minister for Housing and Local Government, Lenora Qereqeretabua disclosed this in Parliament yesterday. The upgrades of Informal Settlements will continue for 12 settlements, four in the Central Division, seven in the Western Division and one in the Northern Division. Ms Qereqeretabua said three informal settlements have had the upgrades completed. Source: https://ftilisun.com.fi/2023/02/17/demand-for-housing-continues-to-increase-says-qeregeretabua/ (accessed February 17, 2023) a) As an economists explain four ways of economic thinking. Use examples from the article to support your discussion. (The examples to support your discussion must only be from the above article. Other examples not mentioned in the article could be discussed with the tutor during the tutorial). b) Discuss pitfalls that should be avoided in the four economic ways of thinking that you have identified in (a) above. c) Again, with reference to the above article discuss the difference between positive and normative analysis. d) In the last sentence of the newspaper article extract, Ms Qerereretabua said that 'three informal settlements have had the upgrades completed: Discuss why microeconomic analysis is useful in analyzing the impact of these settlement upgrades on the price of building materials such as cement and roofing irons Demand For Housing Assignment Paper.
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a) The four economic ways of thinking are: Scarcity: This means that resources are limited, while human wants are unlimited. In the article, there is a shortage of housing supply in Fiji, which has led to an increase in demand. Opportunity cost: This refers to the cost of choosing one option over another. For example, the government has chosen to upgrade informal settlements, which means that resources will be directed towards this project rather than other possible projects. Marginal thinking: This involves analyzing the benefits and costs of making incremental changes. In the article, Ms Qereqeretabua mentions the number of settlements that have been upgraded, indicating that the government is making progress towards meeting the demand for housing. Incentives: This involves analyzing the impact of rewards and punishments on behavior. In the article, there is no mention of any incentives for individuals or firms to increase the supply of housing Demand For Housing Assignment Paper.
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b) Some pitfalls to avoid in economic thinking include: Confusing correlation with causation: Just because two variables are related, it does not mean that one causes the other. For example, an increase in demand for housing could be due to population growth, rather than a lack of supply. Overlooking opportunity costs: Every choice has a cost, and it is important to consider what is being given up when making a decision. For example, the government may be neglecting other areas of development by focusing on upgrading informal settlements. Assuming that incentives always work: People may not always respond to incentives in the way that is expected. For example, offering subsidies for building new homes may not lead to an increase in supply if there are other barriers to entry in the housing market. Ignoring unintended consequences: Policies and decisions can have unintended consequences that should be considered. For example, upgrading informal settlements may lead to gentrification and displacement of the original residents Demand For Housing Assignment Paper.
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c) Positive analysis is concerned with describing and explaining the world as it is, using data and evidence. In the article, Ms Qereqeretabua states that there is an increase in demand for housing and a shortage of supply. This is an example of positive analysis.
Normative analysis, on the other hand, is concerned with making value judgments and prescribing what should be done. For example, the government's decision to upgrade informal settlements is a normative decision Demand For Housing Assignment Paper.
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d) Microeconomic analysis is useful in analyzing the impact of settlement upgrades on the price of building materials because it allows for a detailed examination of the behavior of individuals and firms in response to changes in the market.
For example, if there is an increase in demand for cement and roofing irons due to the upgrades, firms may respond by increasing prices, which could lead to inflation. Additionally, if the upgrades lead to an increase in supply of housing, this could lead to a decrease in demand for building materials, which could lead to a decrease in prices.
By examining the behavior of these individual actors, microeconomic analysis can provide insight into the overall impact of the settlement upgrades on the price of building materials Demand For Housing Assignment Paper.
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