NCEA Level 1 Economics (90986) 2016 — page 1 of 6

Assessment Schedule – 2016

Economics: Demonstrate understanding of how consumer, producer and / or government choices affect society, using market
equilibrium (90986)
Assessment Criteria

Achievement Achievement with Merit Achievement with Excellence

Demonstrate understanding involves:
 identifying, describing, or providing an
explanation of how producer, consumer, and / or
government choices affect market equilibrium
 identifying, describing, or providing an
explanation of how changes in market
equilibrium affect different sectors
 clearly illustrating changes using the supply and
demand model.
Demonstrate in-depth understanding involves:
 providing a detailed explanation, using the
supply and demand model, of how producer,
consumer and / or government choices affect
market equilibrium
 providing a detailed explanation, using the
supply and demand model, of how changes in
market equilibrium affect different sectors.
Demonstrate comprehensive understanding
involves:
 linking detailed explanations of how producer,
consumer, and / or government choices affect
market equilibrium, with detailed explanations
of how those changes affect different sectors
 integrating changes in supply and demand into
detailed explanations.

Grade Score Descriptors

N0 N1 N2 A3 A4 M5 M6 E7 E8
No Very little Some Most Nearly all Some Merit Most Merit Excellence All points
resp Achi Achievement Achievement Achievement evidence. evidence. evidence. One covered.
onse eve evidence, evidence, at evidence. part may be
; ment partial least one weaker.
no evid explanations. explanation.
relev ence
ant .
evid
ence
.

NB: Each question should be read as a whole before awarding a grade.

 NCEA Level 1 Economics (90986) 2016 — page 2 of 6
Question
Sample answers / Evidence
One

(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.

Achievement Achievement with Merit Achievement with Excellence

Demonstrates understanding by:
 completing table accurately
 plotting points correctly
 identifying equilibrium
 identifying a surplus
 explaining a surplus
 explaining the fall in price.
Detailed explanation, which includes:
 using data to identify a surplus
 explaining the surplus, ie Qs > Qd
 fully explaining why price will fall (i.e. producers
will reduce the price in order to clear excess
stock) by referring to the surplus
 using the law of demand OR law of supply to
fully explain the restoration of equilibrium.
Candidate uses detailed explanations, mostly uses
correct data, and in context.
Comprehensive explanation, which includes:
 fully explaining surplus, using correct data
 integrating law of demand (i.e. P decrease,
Qd increase) and law of supply (i.e. P decrease,
Qs decrease), as well as data, into full
explanation of the price decrease (producers
will reduce the price in order to clear excess
stock), and the equilibrium being restored at a
price of $800 and quantity of 7000.
Candidate uses integrated explanations in context,
and uses correct data and economic terminology.
 NCEA Level 1 Economics (90986) 2016 — page 3 of 6
Question
Sample answers / Evidence
Two

(a) New Zealand market for laptop computers (annually)

(b) Before BYOD policy After BYOD policy

Quantity consumers 50 000 computers 60 000 computers

buy annually

Equilibrium price $800 $900

Producer revenue $800 × 50 000 $900 × 60 000

= $40 000 000 = $54 000 000

(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.

Achievement
Demonstrates understanding by:
 labelling new equilibrium point
 labelling shortage at original price
 identifying some quantities / prices before / after
BYOD
 explaining that market demand increases
 explaining the price increases
 explaining that consumer spending increases
 states increase in revenue.
NCEA Level 1 Economics (90986) 2016 — page 4 of 6
Achievement with Merit
Detailed explanation, which includes:
 labelling the new equilibrium
 identifying most quantities / prices before / after
BYOD
 calculating producer revenue
 AND explaining:
- the increase in market demand (students
requiring more laptops for school work,
students are consumers)
- the increase in revenue (P × Q).
- consumers now pay higher price and
purchase a higher quantity, therefore
consumer spending increases
Candidate uses detailed explanations, mostly
uses correct data, and in context.
Achievement with Excellence
Comprehensive explanation, which includes:
 linking reasons for increased market demand to
shift of demand curve to right
 linking rise in price to shortage at Pe and
consumers bidding up the price, in order to
obtain stock
 explaining the increase in revenue with
calculations.
Candidate uses integrated explanations in
context, and uses correct data and
economic terminology
 NCEA Level 1 Economics (90986) 2016 — page 5 of 6

Question
Sample answers / Evidence
Three

(a) New Zealand market for imported digital media (annually)

(b)

(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.

Achievement
Demonstrates understanding by:
 shifting supply curve to the left
 labelling the new equilibrium point
 labelling price overseas sellers receive
 explaining that market supply will decrease
 identifying that equilibrium quantity decreases
 explaining that consumers pay a higher price
 explaining that overseas sellers of digital media
will receive a lower price
Cut Scores
Not Achieved
0–6
NCEA Level 1 Economics (90986) 2016 — page 6 of 6
Achievement with Merit
Detailed explanation, which includes:
 shifting supply curve to the left and labelling the
new equilibrium
AND explaining:
- the decrease in market supply – increased
cost of production / decreased profitability
- that consumers pay a higher price and
overseas sellers receive a lower price
- the effect on New Zealand retailers of
digital media.
Candidate gives detailed explanations, makes
some reference to the graph.
Achievement Achievement with Merit
7 – 12 13 – 18
Achievement with Excellence
Comprehensive explanation, which includes:
 linking reasons for decreased market supply to
shift of supply curve to left, linking increase in
price to shortage at Pe
 fully explaining the increased price paid by
consumers and decrease in price received by
overseas sellers
 fully explaining the effect on New Zealand
retailers of digital media.
Candidate refers to the changes in the graph and
uses correct economic terminology.
Achievement with Excellence
19 – 24