Use paragraphs. That should not be something that goes when saving space. I know there's a better reason, but the best one that I have is just simply: trust me. Paragraphs make you seem like you've written in English before.
Use paragraphs. don't throw out something so fundamental to writing just to save space. part of the point is to be succinct and fit what you want to say in the space provided...it will look really bad if you submit a one paragraph essay in order to cram in 5 more words.