ECS1501 Assignment 3 (DETAILED ANSWERS) 2025 - DISTINCTION GUARANTEED

ECS1501 Assignment 3 (DETAILED ANSWERS) 2025 - DISTINCTION GUARANTEED - DISTINCTION GUARANTEED - DISTINCTION GUARANTEED Answers, guidelines, workings and references ,... Question 1 (12 marks) Maximum word count: 100 words This question is based on the following cartoon: (i) What word/words will an economist use to describe the market condition depicted in the cartoon (ii) Draw a diagram of the market for oil that illustrates the market condition depicted in the cartoon. (iii) Explain the adjustment process to the new equilibrium position in the market for oil. Question 2 (5 marks) No words allowed, only a diagram with annotations To answer this question, only a diagram with annotations is required. Suppose beer and peanuts are complements. In anticipation of warm weather conditions, Injabulo Breweries, the brewers of Number One beer, increased the production of Number One beer. Show on a diagram how this will affect the market for peanuts. Indicate how the equilibrium price and equilibrium quantity of peanuts will change. The direction of any changes should be indicated using arrows. Question 3 (13 marks) Maximum word count: 250 words Beetle Juice, a budget-friendly drinks producer targeting the student market, is currently facing supply challenges due to a key ingredient being negatively affected by tariff policies introduced under President Trump’s “Liberation Day” announcement. While Beetle Juice has enjoyed steady sales because of its low price, it remains a second-choice option for many students. When financial circumstances improve, such as during student grant payout periods, they tend to switch their preference to more popular big-brand alternatives like Rhino Juice or Makhulu Juice. 2 With the National Student Financial Aid Scheme (NFSAS) grants currently being disbursed, explain how the market for Beetle Juice is affected by these changes. Clearly indicate the effect on the equilibrium price and equilibrium quantity of Beetle Juice. You should use a combination of diagrams and written explanations in your answer.