RMIT Classification: Trusted

Sample writing structure – Assignment 1

1: Theoretical explanation for the change in market output or price level.

o Induced by a change in demand while no change in supply.

o Induced by a change in supply while no change in demand.
o Induced by both changes in demand and supply. With this part, a further
explanation of relative magnitudes of demand compared to supply should be
provided.

2: Identify the current changes in market supply and demand of product A. Examine the non-
price determinants and how they are driving the changes in the supply and demand of the
product.

Change in demand: Market demand of product A is increasing/decreasing. Following

are facts and figures about the factors of demand:

 Fact/figure 1… (citation): specify which determinants of demand this

fact/figure refers to. Additionally, explain how the factor affects demand
(positively or negatively, strongly or weakly).
 Facts/figures 2…(citation). Explain in detail as above.
 …
 Note: factor 1 may not always complement the effect of factor 2. Sometimes,
factor 1 may counter the effect of factor 2, which results in the combined
effects on demand.

Change in supply: Market supply of product A is increasing/decreasing. Following

are facts and figures about the factors driving the increase in supply:

 Fact/figure 1… (citation): specify which determinants of supply this

fact/figure refers to. Additionally, explain how the factor affects supply
(positively or negatively, strongly or weakly).
 Facts/figures 2…(citation). Explain in detail as above.
 …
 Note: factor 1 may not always complement the effect of factor 2. Sometimes,
factor 1 may counter the effect of factor 2, which results in the combined
effects on supply.

For the case of both supply and demand changes that are driving the market output,
evaluate the relative change in demand compared to supply and then assess the market
condition (i.e. shortage or oversupply) of the product.

 Examine how fast demand changes relative to supply.

 Note: You need to provide supporting evidence for your evaluation. The
evidence can be in positive or normative terms.
 Positive term means argument based on facts and figures.
 Normative term means argument based on value judgement or your own
assumptions.

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 RMIT Classification: Trusted

3: Relate the the market situation (shortage or oversupply) with the individual firms’ pricing
decisions. Discuss the possible change in the market price given the market situation and
whether individual firms’ price levels are going along with the market price.

4: Explanation of market adjustments to new equilibrium with the reference to diagram:

 Assuming initial equilibrium.

 Introducing current market situation (as claimed in the evaluation part above).
 Explaining how the Qe and Pe are likely to change in respect to the market
situation.
 Given the Pe is changing, referring to law of D and law of S, how Qd and Qs
are going to change. Then explaining how market adjusts to new equilibrium
quantity in respect to the pricing mechanism.

5: Illustration: Illustrate your economic analysis of the market by a clearly labelled graph.

A complete graph should have changes in D and S, intersections of old and new
equilibrium, change in Pe, change in Qe, illustration of market shortage/oversupply,
illustration of market adjustments to new equilibrium. And all curves, axes,
intersection points and areas should be clearly labelled.

Following is the sample graph of a random case:

P S0
S1 : Surplus

E0
P0

P1
E1
D0
D1
0 Q0 Q1 Q

(Students may have different graph which depends on their analysis – partial or full marks
are still rewarded upon to the consistency of the illustration with the written analysis)