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Ass 2016
Ass 2016
Demonstrate understanding involves: Demonstrate in-depth understanding involves: Demonstrate comprehensive understanding
involves:
identifying, describing, or providing an providing a detailed explanation, using the
explanation of how producer, consumer, and / or supply and demand model, of how producer, linking detailed explanations of how producer,
government choices affect market equilibrium consumer and / or government choices affect consumer, and / or government choices affect
identifying, describing, or providing an market equilibrium market equilibrium, with detailed explanations
explanation of how changes in market providing a detailed explanation, using the of how those changes affect different sectors
equilibrium affect different sectors supply and demand model, of how changes in integrating changes in supply and demand into
clearly illustrating changes using the supply and market equilibrium affect different sectors. detailed explanations.
demand model.
(a) Market demand for laptop computers in New Zealand (monthly) Market for laptop computers in New Zealand (monthly)
(b)
Price ($) North Island South Island Market demand
500 3500 6000 9500
600 4500 4500 9000
700 4100 3900 8000
800 3800 3200 7000
900 3000 3000 6000
1000 2100 1900 4000
1100 1700 1300 3000
(c) At $900, there is a surplus of 1500 laptop computers, as there are 7500 laptops supplied but only 6000 laptops demanded. Producers of laptops
will lower the price of laptop computers, as they wish to clear excess stock. As the price falls, quantity demanded will increase (from 6000 to 7000
laptops) as laptops become more affordable. Meanwhile, the producers of laptops will decrease the quantity supplied (from 7500 to 7000 laptops),
as laptops are now less profitable. The price of laptops will stop falling when the price reaches $800, at which the quantity demanded will equal
quantity supplied of 7000 laptop computers.
Demonstrates understanding by: Detailed explanation, which includes: Comprehensive explanation, which includes:
completing table accurately using data to identify a surplus fully explaining surplus, using correct data
plotting points correctly explaining the surplus, ie Qs > Qd integrating law of demand (i.e. P decrease,
identifying equilibrium fully explaining why price will fall (i.e. producers Qd increase) and law of supply (i.e. P decrease,
identifying a surplus will reduce the price in order to clear excess Qs decrease), as well as data, into full
explaining a surplus stock) by referring to the surplus explanation of the price decrease (producers
explaining the fall in price. using the law of demand OR law of supply to will reduce the price in order to clear excess
fully explain the restoration of equilibrium. stock), and the equilibrium being restored at a
price of $800 and quantity of 7000.
Candidate uses integrated explanations in context,
Candidate uses detailed explanations, mostly uses
and uses correct data and economic terminology.
correct data, and in context.
NCEA Level 1 Economics (90986) 2016 — page 3 of 6
Question
Sample answers / Evidence
Two
(c) The introduction of BYOD in schools will increase consumers’ demand for laptop computers, as students require more laptops for school work /
students are part of the consumers group. This will shift the demand curve to the right, from D to D1.
This means that more laptops will be demanded at each and every price. This will cause a shortage of laptop computers at the original equilibrium
price, where Qd is greater than Qs.
As a result, consumers will bid up the price, in order to obtain stock. Consumers will now be paying a higher price and purchasing a higher
quantity, thus consumer spending has increased (from $40 000 000 to $54 000 000).
(Candidates are not expected to use their calculations when explaining consumer spending. Those who do should not be penalised if calculations
are wrong.)
(d) Producer revenue is calculated by price × quantity. At the original equilibrium, Pe × Qe = $800 x 50 000 = $40 000 000. At the new equilibrium,
Pe1 × Qe1 = $900 × 60 000 = $54 000 000. This is an increase in producer revenue of $14 000 000.
NCEA Level 1 Economics (90986) 2016 — page 4 of 6
Demonstrates understanding by: Detailed explanation, which includes: Comprehensive explanation, which includes:
labelling new equilibrium point labelling the new equilibrium linking reasons for increased market demand to
labelling shortage at original price identifying most quantities / prices before / after shift of demand curve to right
identifying some quantities / prices before / after BYOD linking rise in price to shortage at Pe and
BYOD calculating producer revenue consumers bidding up the price, in order to
explaining that market demand increases AND explaining: obtain stock
explaining the price increases - the increase in market demand (students explaining the increase in revenue with
explaining that consumer spending increases requiring more laptops for school work, calculations.
states increase in revenue. students are consumers)
- the increase in revenue (P × Q). Candidate uses integrated explanations in
- consumers now pay higher price and context, and uses correct data and
purchase a higher quantity, therefore economic terminology
consumer spending increases
Question
Sample answers / Evidence
Three
(c) Charging a tax on imported digital media will decrease the supply of imported digital media, as costs of production will increase / imported digital
media becomes less profitable. The decreased supply will shift the supply curve to the left (S to S1). This means that less imported digital media
will be supplied at each and every price. There will be a shortage at Pe.
The equilibrium price increases from Pe to Pe1, and equilibrium quantity decreases from Qe to Qe1.
Charging a tax on imported digital media will mean that consumers now pay a higher price (Pe to Pe1), as they are now paying part of the tax to the
government.
Overseas sellers of digital media will now receive a lower price (Pe to Pp), as they have to pass on the tax to the government.
Consumers will now be paying more for imported digital media, and the overseas sellers will receive less per unit (with the difference going to the
government).
(d) New Zealand retailers are likely to benefit from the introduction of a tax on imported digital media. The imported digital media will now be relatively
less affordable, which effectively decreases the number of competitors and, therefore, increases the sales of New Zealand retailers.
Candidates may also describe the relationship of New Zealand digital media and imported digital media as substitutes.
NCEA Level 1 Economics (90986) 2016 — page 6 of 6
Demonstrates understanding by: Detailed explanation, which includes: Comprehensive explanation, which includes:
shifting supply curve to the left shifting supply curve to the left and labelling the linking reasons for decreased market supply to
labelling the new equilibrium point new equilibrium shift of supply curve to left, linking increase in
AND explaining: price to shortage at Pe
labelling price overseas sellers receive
- the decrease in market supply – increased fully explaining the increased price paid by
explaining that market supply will decrease consumers and decrease in price received by
cost of production / decreased profitability
identifying that equilibrium quantity decreases - that consumers pay a higher price and overseas sellers
explaining that consumers pay a higher price overseas sellers receive a lower price fully explaining the effect on New Zealand
explaining that overseas sellers of digital media - the effect on New Zealand retailers of retailers of digital media.
will receive a lower price digital media.
Candidate refers to the changes in the graph and
Candidate gives detailed explanations, makes uses correct economic terminology.
some reference to the graph.
Cut Scores
Not Achieved Achievement Achievement with Merit Achievement with Excellence
0–6 7 – 12 13 – 18 19 – 24