ECS1500
ASSIGNMENT 3 SEMESTER 1 2023
, QUESTION 1
Due to an increased advertising effort about the
positive effect of activated charcoal in beauty
products, consumers in South Africa are eager to
buy beauty products that contain this ingredient.
Explain how this will affect the market for activated
charcoal. You are allowed to use a diagram to
explain your answer, but you will only be allocated
marks for the correct verbal explanation.
The increased demand for beauty products
containing activated charcoal in South Africa will
cause a rightward shift in the demand curve for
activated charcoal. This is because consumers are
now willing to buy more of the product at every given
price, leading to an increase in the quantity
demanded at each price level.
As shown in the diagram below, the original demand
curve D1 shifts to the right to D2, leading to an
increase in both the equilibrium price and quantity of
activated charcoal in the market.
The suppliers of activated charcoal will benefit from
the increased demand as they can sell more at a
higher price. However, if the suppliers cannot
increase their production in response to the
increased demand, it could result in shortages and
higher prices, which may lead to some consumers
switching to alternative beauty products.
ASSIGNMENT 3 SEMESTER 1 2023
, QUESTION 1
Due to an increased advertising effort about the
positive effect of activated charcoal in beauty
products, consumers in South Africa are eager to
buy beauty products that contain this ingredient.
Explain how this will affect the market for activated
charcoal. You are allowed to use a diagram to
explain your answer, but you will only be allocated
marks for the correct verbal explanation.
The increased demand for beauty products
containing activated charcoal in South Africa will
cause a rightward shift in the demand curve for
activated charcoal. This is because consumers are
now willing to buy more of the product at every given
price, leading to an increase in the quantity
demanded at each price level.
As shown in the diagram below, the original demand
curve D1 shifts to the right to D2, leading to an
increase in both the equilibrium price and quantity of
activated charcoal in the market.
The suppliers of activated charcoal will benefit from
the increased demand as they can sell more at a
higher price. However, if the suppliers cannot
increase their production in response to the
increased demand, it could result in shortages and
higher prices, which may lead to some consumers
switching to alternative beauty products.
