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90986 1.4 Evidence Statement
Q
Evidence Statement
ONE
(a)
Missing values from table are: 350, 250, 200, 150, 50
(b) (c)
West Cape Holiday Home Market
Price 350
($/night)
Surplus
S
300
250
Pe 200
150
100
D
50
0
0
50
100
150
Qd
200
Qe
250
Qs
300
350
400
Quantity (homes)
(d)
At $250, 250 holiday homes are supplied and only 150 are demanded. There is a surplus
of 100 holiday homes. Producers will lower the price of their holiday homes to rent out
unused homes. As the price of holiday homes fall there will be an increase in the quantity
demanded by consumers as now more consumers can afford to rent holiday homes (or
substitutes, eg hotel rooms, are now relatively more expensive) and a decrease in the
quantity supplied by producers as renting holiday homes is no longer as profitable as
before. Price will continue to fall until $200 where the surplus is eliminated and quantity
supplied equals quantity demanded of 200 holiday homes per night.
© NZCETA 2012 Economics Level 1 CETA Evidence Statement AS 90986 (1.4)
NZCETA has approval from NZQA to use their materials in the development of this resource.
N1
N2
A3
Shows partial
understanding with only
one of:
 Correct calculating of
most market demand
quantities
 Correct plotting of
most points
 Identifies a surplus
 Describes a surplus
 Identifies a decrease
in price
Shows partial
understanding with two
of:
 Correct calculating of
most market demand
quantities
 Correct plotting of
most points
 Identifies a surplus
 Describes a surplus
 Identifies a decrease
in price
Shows understanding
by correctly calculating
and plotting all points
A4
Shows breadth of
understanding by
correctly calculating
and plotting all points
AND
AND
one of:
 Identifies a surplus
 Describes a surplus
 Identifies a decrease
in price
two of:
 Identifies a surplus
 Describes a surplus
 Identifies a decrease
in price
M5
M6
Detailed explanation
of how equilibrium is
restored.
Detailed explanation
of how equilibrium is
restored.
Any three of:
 Uses data to
identify surplus
 Identifies surplus as
Qs - Qd
 Explains why price
will decrease eg.
Producers cut price
 P↓=Qd↑
 P↓=Qs↓
Any four of:
 Uses data to
identify surplus
 Identifies surplus as
Qs - Qd
 Explains why price
will decrease eg.
Producers cut price
 P↓=Qd↑
 P↓=Qs↓
E7
E8
Comprehensive
explanation of how
equilibrium is restored
with some reference to
data/graph.
Only minor errors in
economic terms
Comprehensive
explanation of how
equilibrium is restored
with specific reference to
data/graph.
Uses appropriate
economic terms
 Explains surplus using
data (correctly
calculates surplus)
 Explains why price will
decrease eg. Producers
cut price to rid excess
stock
 Applies law of demand
to explain P↓=Qd↑
 Applies law of supply to
explain P↓=Qs↓
 P↓ until equilibrium is
restored.
 Explains surplus using
data (correctly
calculates surplus)
 Explains why price will
decrease eg. Producers
cut holiday home rates
to let excess homes.
 Applies law of demand
to explain P↓=Qd↑
 Applies law of supply to
explain P↓=Qs↓
 P↓ until equilibrium is
restored at price of $200
and 200 holiday homes
per night.
N0 = no response or no relevant evidence
© NZCETA 2012 Economics Level 1 CETA Evidence Statement AS 90986 (1.4)
NZCETA has approval from NZQA to use their materials in the development of this resource.
Q
Evidence Statement
TWO
(a)
S
Price ($)
Pe
P1
D1
Q1
Qe
D
Quantity
(b)
The oil spill will cause a decrease in tourists visiting West Cape. With fewer tourists there
will be a decrease in the demand for holiday homes and the demand curve shifts to the
left. At the old equilibrium price (Pe) there is now a surplus of holiday homes as the new
quantity demanded is less than the quantity supplied. Producers will lower the price of
holiday homes to eliminate this excess supply. As the price falls there will be a decrease in
the quantity supplied of holiday homes as firms find renting holiday homes less profitable.
Price continues to fall to P1 where the quantity supplied equals the quantity demanded of
Q1.
Firms will gain lower profits as they are renting fewer holiday homes at a lower price.
Holiday home firms may need to lay off staff to cope with the decreased demand for their
services from the decreased amount of customers. This will decrease the firms wage bill.
Holiday home firms may need to convert homes to family homes or flats to earn income
until the oil spill is cleaned up.
© NZCETA 2012 Economics Level 1 CETA Evidence Statement AS 90986 (1.4)
NZCETA has approval from NZQA to use their materials in the development of this resource.
N1
N2
A3
A4
Shows partial
understanding with
only one of:
 Shifts demand curve
to the left
 States a decrease in
demand
 Identifies a price
decrease
 Identifies a
decrease in
equilibrium quantity
Shows partial
understanding with
two of:
 Shifts demand curve
to the left
 States a decrease in
demand
 Identifies a price
decrease
 Identifies a
decrease in
equilibrium quantity
Shows understanding
with all of:
 Shifts demand curve
to the left
 States a decrease in
demand
 Identifies a price
decrease
 Identifies a decrease
in equilibrium
quantity
Shows breadth of
understanding by:
 Shifts demand curve
to left and shows
new equilibrium:
AND
partially explains two
of:
 Demand decreases
due to decreased
tourist numbers
 Fall in price due to
surplus / excess
supply
 Decreased price
leads to Decreased
profits
 Decreased quantity
leads to Decreased
profits.
M5
M6
Detailed explanation
of effect on
equilibrium.
Detailed explanation
of effect on
equilibrium.
 Shifts demand curve
to left and shows
new equilibrium:
 Shifts demand curve
to left and shows
new equilibrium:
AND
AND
Explains three of:
Explains four of:
 Demand decreases
due to decreased
tourist numbers
 Fall in price due to
surplus / excess
supply
 Producers cut price
to rid excess stock
 Decreased price
leads to Decreased
profits
 Decreased quantity
leads to Decreased
profits
 Demand decreases
due to decreased
tourist numbers
 Fall in price due to
surplus / excess
supply
 Producers cut price
to rid excess stock
 Decreased price
leads to Decreased
profits
 Decreased quantity
leads to Decreased
profits
E7
E8
Comprehensive
explanation of the effect
of the oil spill on the
West Cape holiday
home industry. Mostly
in context.
Comprehensive
explanation of the effect
of decreased tourist
numbers on the West
Cape holiday home
industry in context.
Only minor errors in
economic terms
Uses appropriate
economic terms
 Links reasons for
decreased demand to
shift of demand curve
to the left
 Links fall in demand to
surplus and producers
lowering prices.
 Links reasons for
decreased demand to
shift of demand curve
to the left
 Links fall in demand to
surplus and producers
lowering prices.
AND
AND
Refers to the process
using
Refers to the process
using
 Refers to P↓= Qs↓(not
S↓)
 Decreased price and
quantity leads to
Decreased profits
 Effect on resource use
explained (eg staff
layoffs)
 Refers to P↓= Qs↓(not
S↓)
 Decreased price and
quantity leads to
Decreased profits
 Effect on resource use
explained (eg staff
layoffs) and how this
leads to fall in wage
costs.
N0 = no response or no relevant evidence
© NZCETA 2012 Economics Level 1 CETA Evidence Statement AS 90986 (1.4)
NZCETA has approval from NZQA to use their materials in the development of this resource.
Q
Evidence Statement
THRE (a)
E
S1
Price ($)
S
P1
Pe
D
Q1
Qe
Quantity
(b)
With the requirement to pay higher wages to cleaners there will be an increase in the costs
of production of holiday home firms. This will decrease supply and shift the supply curve to
the left as the cost increase means they can no longer afford to supply as many holiday
homes at each and every price/as the cost increase has made supplying holiday homes
no longer as profitable. At the old equilibrium price (Pe) there is now a shortage of holiday
homes as the quantity demanded is greater than the quantity supplied. Consumers will bid
up the price of holiday homes to obtain the holiday homes they desire. As the price rises
there will be a decrease in the quantity demanded of holiday homes as consumers find
renting holiday homes no longer as affordable/as they switch consumption to substitutes
like hotels that are now relatively cheaper. Price continues to rise to P1 where the quantity
supplied equals the quantity demanded of Q1.
Consumers are now worse of as they pay a higher price P1 and hire a lower quantity Q1 of
holiday homes. This may mean they have less funds available for spending on other
tourist activities on their holiday. There may be an increase in demand by consumers for
motel rooms in West Cape as they switch consumption to the now relatively cheaper
substitute.
© NZCETA 2012 Economics Level 1 CETA Evidence Statement AS 90986 (1.4)
NZCETA has approval from NZQA to use their materials in the development of this resource.
N1
N2
A3
Shows partial
understanding with
only one of:
 Shifts supply curve
to the left
 States a decrease in
supply
 Identifies a price
increase
 Identifies a
decrease in
equilibrium quantity
Shows partial
understanding with
two of:
 Shifts supply curve
to the left
 States a decrease in
supply
 Identifies a price
increase
 Identifies a
decrease in
equilibrium quantity
Shows understanding
with three of:
 Shifts supply curve
to the left
 States a decrease in
supply
 Identifies a price
increase
 Identifies a
decrease in
equilibrium quantity
A4
Shows breadth of
understanding by:
 Shifts supply curve
to left and shows
new equilibrium:
AND
partially explains two
of:
 Supply decreases
due to increased
costs of production
 Increase in price
due to shortage /
excess demand
 Equilibrium price
has increased
 Equilibrium quantity
has decreased
M5
M6
Detailed explanation
of effect on
equilibrium.
Detailed explanation
of effect on
equilibrium.
 Shifts supply curve
to left and shows
new equilibrium:
 Shifts supply curve
to left and shows
new equilibrium:
AND
AND
Explains two of:
Explains three of:
 Supply decreases
due to increased
costs of production
 Increase in price
due to shortage /
excess demand
 Consumers bid up
price
 P↑ leads to Qd ↓ (not
D↓ )
 Consumers worse
off
 Supply decreases
due to increased
costs of production
 Increase in price
due to shortage /
excess demand
 Consumers bid up
price
 P↑ leads to Qd ↓ (not
D↓ )
 Consumers worse
off
E7
E8
Comprehensive
explanation of the effect
of change in supply on
market equilibrium and
consumers. Mostly in
context.
Comprehensive
explanation of the effect
of change in supply on
market equilibrium and
consumers in context.
Uses appropriate
economic terms
Only minor errors in
economic terms
 Links reasons for
decreased supply to
shift of supply curve to
the left
 Links fall in supply to
shortage and
consumers bidding up
prices to obtain
holiday homes they
desire.
AND
Refers to the process
using
 Why increased price
leads to decreased Qd.
 Less holiday homes
available for
consumers to hire
 Links reasons for
decreased supply to
shift of supply curve to
the left
 Links fall in supply to
shortage and
consumers bidding up
prices to obtain holiday
homes they desire.
AND
Refers to the process
using
 Why increased price
leads to decreased
Qd.
 Less holiday homes
available for
consumers to hire
AND
 One other effect on
consumers (eg more
demand for
substitutes/hotels, less
funds available for
other activities)
N0 = no response or no relevant evidence
© NZCETA 2012 Economics Level 1 CETA Evidence Statement AS 90986 (1.4)
NZCETA has approval from NZQA to use their materials in the development of this resource.
Q
Evidence Statement
FOU
R
(a)
280
S
240
200
Pe160
120
P180
Max Price
40
D
0
0
50
100
1
Q
150
200
e
250
300
350
400
Q
(b)

Quantity of hotel rooms rented before and after the maximum price control
Before: 200
(rooms)
After: 100
(rooms)
 Price received by producers before and after the maximum price control
Before: $160
After: $80
Price paid by consumers before and after the maximum price control
Before: $160
After: $80
 Revenue of producers before and after the maximum price control
Before: $32000
After: $8000
 Spending of consumers before and after the maximum price control
Before: $32000
After: $8000
(c)
Producers find renting hotel rooms less profitable as they can charge no more than $80
per night. They will decrease their output/quantity supplied to 100 rooms per night.
Producers are worse off as their revenue has fallen from $32000 to $8000 per night.
The price paid by consumers will fall from $160 to $80 per night as it is illegal to be
charged a higher price. Although consumers demand 300 rooms at this price they can only
rent 100 as that is all that is being supplied by producers/at $80 consumers demand 300
rooms but producers only supply 100 rooms. There is a shortage of 200 rooms.
South Point will be worse off as there will be fewer tourists coming to town due to there
being fewer hotel rooms available. This means reduced revenue for restaurants/souvenir
shops etc. There will be less employment is South Point as producers will not need as
many staff due to fewer tourists. The council may not be re-elected as the maximum price
has not achieved the outcome they wanted. The max price has led to fewer rooms being
supplied by producers so there will be tourists able to visit the town.
© NZCETA 2012 Economics Level 1 CETA Evidence Statement AS 90986 (1.4)
NZCETA has approval from NZQA to use their materials in the development of this resource.
N1
N2
A3
Shows partial
understanding with
only one of:
 Shows impact of
maximum price
control on diagram
 Labels a lower price
(P1)
 Labels a lower
quantity (Q1)
Shows partial
understanding with
two of:
 Shows impact of
maximum price
control on diagram
 Labels a lower price
(P1)
 Labels a lower
quantity (Q1)
Shows understanding
with all of:
 Shows impact of
maximum price
control on diagram
 Labels a lower price
(P1)
 Labels a lower
quantity (Q1)
A4
Shows breadth of
understanding by
showing the effect of
the maximum price
control on the
diagram:
M5
Detailed explanation
of effect of subsidy.
 Correctly shows
impact of maximum
price control on
diagram:
AND
M6
Detailed explanation
of effect on
equilibrium.
 Correctly shows
impact of maximum
price control on
diagram:
AND
Three of:
 Quantity sold before
and after
 Price received by
producers before
and after
 Price paid by
consumers before
and after
 Producer revenue
before and after
 Consumer spending
before and after
AND
Explains by correctly
stating Four of:
 Quantity sold before
and after
 Price received by
producers before
and after
 Price paid by
consumers before
and after
 Producer revenue
before and after
 Consumer spending
before and after
E7
E8
Comprehensive
explanation of the effect
of maximum price
control by explaining:
Comprehensive
explanation of the effect
of subsidy by explaining:
 Effect on producer
 Effect on consumer.
 Effect on South Point
society due to
maximum price control
 Effect on producer
 Effect on consumer.
 Effect on South Point
society due to
maximum price control
AND
Explains by correctly
stating Five of :
 Quantity sold before
and after
 Price received by
producers before
and after
 Price paid by
consumers before
and after
 Producer revenue
before and after
 Consumer spending
before and after
AND
Figures correct but not
required to be
completed in the
explanation. Only minor
errors in economic
terms
Figures and economic
terms correct and at
least two figures are
used in the
explanation
N0 = no response or no relevant evidence
© NZCETA 2012 Economics Level 1 CETA Evidence Statement AS 90986 (1.4)
NZCETA has approval from NZQA to use their materials in the development of this resource.
Judgement statement
Score range
Not Achieved
Achievement
Achievement
with Merit
Achievement
with Excellence
0-9
10 - 18
19 - 24
25 - 32
© NZCETA 2012 Economics Level 1 CETA Evidence Statement AS 90986 (1.4)
NZCETA has approval from NZQA to use their materials in the development of this resource.