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ECS1501 SUGGESTED ANSWERS – ASSESSMENT 5Question 1 (12 marks) Maximum word count: 100 words
Giant, the world’s leading brand of high-quality bicycles and cycling gear, announced that their pre-tax profit has
decreased by almost 50% while their sales were down by approximately 16%. Watch the following excerpt from
The Wild Ones Podcast Ep.41produced by Cade Media and answer the following questions.
(i) Which of the presenters best describes the market condition that Giant Bicycles faces and explain why
you agree with him or her?
(ii) Draw a diagram of the bicycle market that illustrates the market conditions discussed in the podcast.
(iii) Explain the adjustment process to the new equilibrium position in the bicycle market.
Memorandum Question 1
(i) The 3rd presenter, the guy with the beard, Nic
Oversupply ✓ - Excess supply or a surplus because quantity supplied more than quantity demanded (not
supply is bigger/greater than demand) ✓ This mark can be awarded here or in iii). Do not award it in both.
(ii) The diagram should look as follows, with the marks allocated as indicated:
• Axes and origin correctly annotated ✓
• Original equilibrium correctly shown and
annotated (i.e. a demand and supply
curve with original equilibrium
indicated) ✓
• Price above equilibrium shown✓
• Qs > Qd correctly shown✓
• Excess supply (or surplus) correctly
shown and annotated ✓
1 Please turn over.
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