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ECS2601 ASSIGNMENT 1 2026
DUE 19 MARCH 2026
Question 1
1.1 In your own words, explain how you understand the working of the market
mechanism.
1.1 The working of the market mechanism
The market mechanism is the process by which the forces of supply and demand
interact to determine what goods are produced, how much is produced, and at what
price they are sold. Without any outside intervention such as price controls, this
interaction naturally moves towards an equilibrium point where the quantity that
producers are willing to supply equals the quantity that consumers are willing to buy. At
this point, the market “clears,” meaning there is no surplus (excess supply) or shortage
(excess demand) (Chapter 2, page 43).
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