ECS1501
Assignment 3
DUE 21 July 2025
, ECS1501
Assignment 3 (2025)
Due Date: 21 July 2025
Student Name: Student Number:
Question 1 (12 marks) — Maximum 100 words
(i)
An economist would refer to this market condition as a shortage or excess demand.
This situation arises when the price of a good or service is set below its equilibrium
level, causing the quantity demanded to exceed the quantity supplied. Consumers want
to buy more at the lower price, but producers are not willing to supply enough, leading
to a shortage in the market (Mankiw, 2021).
(ii) Diagram: Market for Oil Showing Shortage Condition
markdown
CopyEdit
Price
│
│ S
│ /
│ /
│ / ← Shortage (Excess Demand)
│-------/------------------ P₁ (Price below equilibrium)
│ /|\
│ /|\
│ / | \
│ / | \
│/ | \
│/ | \D
Assignment 3
DUE 21 July 2025
, ECS1501
Assignment 3 (2025)
Due Date: 21 July 2025
Student Name: Student Number:
Question 1 (12 marks) — Maximum 100 words
(i)
An economist would refer to this market condition as a shortage or excess demand.
This situation arises when the price of a good or service is set below its equilibrium
level, causing the quantity demanded to exceed the quantity supplied. Consumers want
to buy more at the lower price, but producers are not willing to supply enough, leading
to a shortage in the market (Mankiw, 2021).
(ii) Diagram: Market for Oil Showing Shortage Condition
markdown
CopyEdit
Price
│
│ S
│ /
│ /
│ / ← Shortage (Excess Demand)
│-------/------------------ P₁ (Price below equilibrium)
│ /|\
│ /|\
│ / | \
│ / | \
│/ | \
│/ | \D
