Interdependence of Supply and Demand in the Housing Sector

Please read the Economic reading in the attachment first and then complete this essay according to the specific structure and grading rubric (also in the attachment).

Structure your paper: 1. Introduction (100 words) – a. Outlines and summarizes the article in 2 or 3 brief sentences. b. In this introduction, define a key term that will be used going forward through the essay. Make sure that this doesn’t just become a list of definitions, though! Only define a key term if relevant and if you’ve already used it in a sentence. 2. Economics Concept→link it to your introduction (25 words) – a. Identify the key concept (ONE of the nine central concepts: scarcity, choice, change, efficiency, equity, economic well-being, sustainability, intervention, and interdependence) that will be the focus of your commentary. i. SCARCITY– The central concept in economics, scarcity refers to the limited availability of economic resources relative to society’s unlimited demand for goods and services. Thus, economics is the study of how to make the best possible use of scarce or limited resources to satisfy unlimited human needs and wants. ii. CHOICE–Since resources are scarce, economics is a study of choices. Not all needs and wants can be satisfied; this necessitates choice and gives rise to the idea of opportunity cost. Economic decision-makers continually make choices between competing alternatives, and economics studies the consequences of these choices, both present, and future. iii. EFFICIENCY–Efficiency is a quantifiable concept determined by the ratio of useful output to total input. Allocative efficiency refers to making the best possible use of scarce resources to produce the combinations of goods and services that are optimum for society, thus minimizing resource waste. iv. EQUITY–In contrast to equality, which describes situations where economic outcomes are similar for different people or different social groups, equity refers to the concept or idea of fairness. Fairness is a normative concept, as it means different things to different people. In economics, inequity is often interpreted to refer to inequality, which may apply to the distribution of income, wealth, or human opportunity. Irrespective of the economic system, inequity or inequality remains a significant issue both within and between societies. The degree to which markets versus governments should, or are able to, create greater equity or equality in an economy is an area of much debate. v. ECONOMIC WELL-BEING–Economic well-being is a multidimensional concept relating to the level of prosperity and quality of living standards enjoyed by members of an economy. It includes 1. present and future financial security 2. the ability to meet basic needs 3. the ability to make economic choices permitting achievement of personal satisfaction 4. the ability to maintain adequate income levels over the long term vi. SUSTAINABILITY–Sustainability in economics refers to the ability of the present generation to meet its needs without compromising the ability of future generations to meet their own needs. It refers to limiting the degree to which the current generation’s economic activities create harmful environmental outcomes involving resource depletion or degradation that will negatively affect future generations. Sustainability is proving increasingly important in all economic analysis as planetary boundaries are pushed to the limit. vii. CHANGE–An understanding of the concept of change is essential in economics. The economic world is in a continual state of flux, and economists must be aware of this and adapt their thinking accordingly. The concept of change is important both in economic theory and the empirical world that economics studies. In economic theory, economics focuses not on the level of the variables it investigates but on their change from one situation to another. Empirically, the world that is studied by economists is always subject to continuous and profound change at institutional, structural, technological, economic, and social levels. viii. INTERDEPENDENCE–Individuals, communities, and nations are not self-sufficient. Consumers, companies, households, workers, and governments, all economic actors, interact with each other within and, increasingly, across nations in order to achieve economic goals. The greater the level of interaction, the greater will be the degree of interdependence. In a highly interdependent economic world, decisions by certain economic actors are likely to generate many, and often unintended, economic consequences for other actors. A consideration of possible economic consequences of interdependence is essential when conducting economic analysis. ix. INTERVENTION–Intervention in economics usually refers to government involvement in the workings of markets. While markets are considered the most efficient mechanism to organize economic activity, it is recognized that they may fail to achieve certain societal goals, such as equity, economic well-being, or sustainability. Failure to achieve such goals may be considered a sufficient reason for government intervention. In the real world, there is often disagreement among economists and policymakers on the need for and extent of government intervention. There is considerable debate about the merits of intervention versus the free market. b. Highlight the key concept in BOLD every time you use it (or a variation of the word) throughout the commentary. For example, if your key concept is ‘intervention,’ then you highlight in bold letters every time you write intervention, intervenes, intervened, etc. 3. Draw the diagram (0 Words) The diagram (and its titles, etc.) do not count in your word count. You need to diagram the problem explained in the article. And also diagram your solution. Sometimes both the problem and the solution can be shown on one diagram. Sometimes not. Of course, don’t include a diagram (or any theory at all) that doesn’t help you to explain the case. Include in your diagram as much information as you can. It will need to: a. Use a full title such as “The Market for Apples in Ontario.” b. Label all of your lines c. Mark all of your intersections with a letter so you can refer to them later in your article. d. Shade in and fully label the areas of the shapes on your diagram (i.e., excess demand), e. Indicate the exact prices and quantities (or percentage changes in price or quantity if they are included in the article. If not, label them Q1, Q2, P1, P2, etc. 4. Fully explain your diagram (250 words) a. Analyze what is happening in the article using Diagram 1 (which will be drawn directly below this paragraph) b. Make sure all labels and shifts in the diagram are explained in this paragraph, for example: “As shown in Figure 1 below, when consumer confidence levels rise, there will be an increase in AD, which is represented by a shift from AD1 to AD2….” c. Link your explanation back to the key concept (one of the nine central concepts: scarcity, choice, change, efficiency, equity, economic well-being, sustainability, intervention, and interdependence) 5. Evaluation and Conclusion(425 words) a. Provide your arguments and balance them with counter-arguments while referring back to the quotes/evidence you highlighted in the article and linking back to the key concept i. Discuss pros vs. cons. ii. Discuss short-term effects vs. long-term effects. iii. Discuss the assumptions behind your analysis vs. the limitations of those assumptions. iv. Discuss what should be happening in theory vs. what is happening in practice. v. Discuss the stakeholders gaining vs. the stakeholders losing. b. Remember to reach a conclusion and prioritize your arguments based on what is most relevant in the context of the article. The following are not included in the word count. ● Acknowledgments ● Contents page ● Diagrams ● Labels—of five words or fewer ● Headings on diagrams—of 10 words or fewer ● Tables of statistical data ● Equations, formulae, and calculations ● Citations (which, if used, must be in the body of the commentary) ● References (which, if used, must be in the footnotes/endnotes)