ECS1501
ASSIGNMENT 3 2025
UNIQUE NO.
DUE DATE: 21 JULY 2025
, Question 1 (12 Marks)
(i) What word/words will an economist use to describe the market condition
depicted in the cartoon?
An economist would describe the situation in the cartoon as a shortage. This means
there is not enough oil being supplied at the current price to meet the demand. In other
words, many people want to buy oil, but there isn’t enough available at that price. A
shortage usually pushes prices to go up.
(ii) Draw a diagram of the market for oil that illustrates the market condition
depicted in the cartoon.
✍️ Since this is a written answer, please draw a basic supply and demand diagram
using these steps:
Label the vertical axis as "Price" and the horizontal axis as "Quantity".
Draw an upward-sloping Supply curve (S) and a downward-sloping Demand
curve (D).
Mark the equilibrium point where the two curves meet.
Then, show a price below the equilibrium. At this lower price:
o The quantity demanded is high.
o The quantity supplied is low.
The difference between the two is the shortage.
Use arrows to show how price moves up towards the new equilibrium.
(iii) Explain the adjustment process to the new equilibrium position in the market
for oil.
ASSIGNMENT 3 2025
UNIQUE NO.
DUE DATE: 21 JULY 2025
, Question 1 (12 Marks)
(i) What word/words will an economist use to describe the market condition
depicted in the cartoon?
An economist would describe the situation in the cartoon as a shortage. This means
there is not enough oil being supplied at the current price to meet the demand. In other
words, many people want to buy oil, but there isn’t enough available at that price. A
shortage usually pushes prices to go up.
(ii) Draw a diagram of the market for oil that illustrates the market condition
depicted in the cartoon.
✍️ Since this is a written answer, please draw a basic supply and demand diagram
using these steps:
Label the vertical axis as "Price" and the horizontal axis as "Quantity".
Draw an upward-sloping Supply curve (S) and a downward-sloping Demand
curve (D).
Mark the equilibrium point where the two curves meet.
Then, show a price below the equilibrium. At this lower price:
o The quantity demanded is high.
o The quantity supplied is low.
The difference between the two is the shortage.
Use arrows to show how price moves up towards the new equilibrium.
(iii) Explain the adjustment process to the new equilibrium position in the market
for oil.
