, ECS2601 Assignment 1 (COMPLETE ANSWERS) Semester 1 2026
- DUE 19 March 2026;100% trusted ,comprehensive and complete
reliable solution with clear explanation.
QUESTION 1 (10 MARKS
1.1 Explain how you understand the working of the market
mechanism (2 marks)
The market mechanism refers to the process through which prices and
quantities are determined by the interaction of demand and supply.
Consumers express their willingness to buy through demand, and
producers express their willingness to sell through supply. When
demand equals supply, the market reaches equilibrium, where there is no
shortage or surplus. If demand exceeds supply, prices rise, encouraging
producers to supply more and consumers to demand less. If supply
exceeds demand, prices fall, encouraging consumers to buy more and
producers to reduce output.
(2 marks).
(a) Completeness vs Transitivity in Consumer Choice
Completeness and transitivity are assumptions about how rational
consumers make choices.
Completeness means that a consumer is able to compare any two
bundles of goods and make a decision. Given two bundles A and B, the
consumer can say:
A is preferred to B, or
B is preferred to A, or
The consumer is indifferent between A and B.
- DUE 19 March 2026;100% trusted ,comprehensive and complete
reliable solution with clear explanation.
QUESTION 1 (10 MARKS
1.1 Explain how you understand the working of the market
mechanism (2 marks)
The market mechanism refers to the process through which prices and
quantities are determined by the interaction of demand and supply.
Consumers express their willingness to buy through demand, and
producers express their willingness to sell through supply. When
demand equals supply, the market reaches equilibrium, where there is no
shortage or surplus. If demand exceeds supply, prices rise, encouraging
producers to supply more and consumers to demand less. If supply
exceeds demand, prices fall, encouraging consumers to buy more and
producers to reduce output.
(2 marks).
(a) Completeness vs Transitivity in Consumer Choice
Completeness and transitivity are assumptions about how rational
consumers make choices.
Completeness means that a consumer is able to compare any two
bundles of goods and make a decision. Given two bundles A and B, the
consumer can say:
A is preferred to B, or
B is preferred to A, or
The consumer is indifferent between A and B.
