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90986 1.4 Evidence Statement
Q
Evidence Statement
ONE
(a)
Price
$(boxes)
New Zealand Strawberry Market
5
4.5
S
4
3.5
Pe
3
2.5
D
2
1.5
1
0.5
0
0
1000
2000
3000
4000
5000
Qe
6000
7000
8000
Quantity
(boxes)
© NZCETA 2014 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.
b)
Price
$(boxes)
New Zealand Strawberry Market
5
4.5
S
4
P1 3.5
Pe
3
2.5
D
2
1.5
1
Surplus
0.5
0
0
1000
2000
3000
Qd
4000
5000
Qe
6000
Qs
7000
8000
Quantity
(boxes)
c)
At 3.50 there is a surplus of 3,000 boxes of strawberries, as demand for strawberries is
only 3000 boxes, while supply of strawberries is 6000 boxes. Strawberry suppliers will
lower their prices to clear the surplus strawberries.
As the price decreases, quantity demanded will increase from 3000 to 5000, as
strawberries will now be more affordable. This is the Law of Demand.
At the lower price strawberry suppliers will decrease the quantity they will supply to the
market from 6000 to 5000, as strawberries are now less profitable. This is the Law of
Supply
The price of strawberries will now stop falling when the price equals $3.00, at which the
quantity demanded will equal the quantity supplied of 5000
© NZCETA 2014 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
M5
M6
Shows partial
understanding with only
one of:
 Correct plotting of
most points
 Identifies a surplus
 Describes a surplus
 Identifies a decrease
in price
Shows partial
understanding with two
of:
 Correct plotting of
most points
 Identifies a surplus
 Describes a surplus
 Identifies a decrease
in price
Shows understanding
by correctly calculating
and plotting 7 points
and equilibrium point
identified
Shows understanding
by correctly calculating
and plotting all points
and equilibrium point
identified
Detailed explanation
of how equilibrium is
restored.
Detailed explanation
of how equilibrium is
restored.
AND ONE of
AND TWO of
one of:
 Identifies a surplus
 Describes a surplus
 Identifies a decrease
in price
one of:
 Identifies a surplus
 Describes a surplus
 Identifies a decrease
in price
Any three of:
 Uses data to
identify surplus
 Identifies surplus as
Qs - Qd
 Explains why price
will decrease eg.
Producers cut price
 Applies law of
demand P↓=Qd↑
 Applies law of
supply P↓=Qs↓
Any four of:
 Uses data to
identify surplus
 Identifies surplus as
Qs - Qd
 Explains why price
will decrease eg.
Producers cut price
 Applies law of
demand P↓=Qd↑
 Applies law of
supply P↓=Qs↓
E7
E8
Comprehensive
explanation of how
equilibrium is restored
with some reference to
data/graph.
Only minor errors in use
of 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
 Explains law of demand
to explain P↓=Qd↑ i.e. as
more affordable
 Explains law of supply
to explain P↓=Qs↓ i.e. as
less profitable
 P↓ until equilibrium is
restored (figures not
needed)
 Explains surplus using
data (correctly
calculates surplus)
 Explains why price will
decrease eg. Producers
cut price to rid excess
stock
 Explains law of demand
to explain P↓=Qd↑ i.e. as
more affordable
 Explains law of supply
to explain P↓=Qs↓ i.e. as
less profitable
 P↓ until equilibrium is
restored at $ 3.00,
Qe = 5000
N0 = no response or no relevant evidence
© NZCETA 2014 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
S
Price ($)
P1
Pe
D1
D
Qe
Q1
Quantity
At Christmas, consumers preference for strawberries increases, as it is a traditional Xmas
dessert. This will cause market demand for strawberries to increase.
This is shown as a shift of the demand curve to the right D- D1. There are more
strawberries demanded at every price.
This will create a shortage of strawberries at the existing equilibrium price. Consumers will
bid up the price of strawberries to avoid missing out.
With the higher price of strawberries they will become more profitable for the suppliers, so
the quantity of strawberries supplied will increase.
Supplier will be able to sell more strawberries at the higher price, so their revenue will
increase.
© NZCETA 2014 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 right
 States an increase i
in demand
 Identifies a price
increase
 Identifies an
increase in quantity
sold
Shows partial
understanding with
two of:
 Shifts demand curve
to the right
 States an increase i
in demand
 Identifies a price
increase
 Identifies an
increase in quantity
sold
Shows understanding
with THREE of:
 Shifts demand curve
to the right
 States an increase i
in demand
 Identifies a price
increase
 Identifies an
increase in quantity
sold
Shows breadth of
understanding with
FOUR of :
 Shifts demand curve
to the right
 States an increase i
in demand
 Identifies a price
increase
 Identifies an
increase in quantity
sold
M5
M6
Detailed explanation
of the change in
demand.
Detailed explanation
of effect on
equilibrium.
 Shifts demand curve
to right and shows
new equilibrium:
 Shifts demand curve
to left and shows
new equilibrium:
AND
AND
Explains three of:
Explains four of:
 Demand increases
due to increased
preference/taste for
strawberries
 rise in price due to
shortage
 consumers bid up
price to avoid
missing out
 as price increases,
quantity supplied
increases (not S)
 benefit to producers
 Demand increases
due to increased
preference/taste for
strawberries
 rise in price due to
shortage
 consumers bid up
price to avoid
missing out
 as price increases,
quantity supplied
increases (not S)
 benefit to producers
E7
E8
Comprehensive
explanation of the effect
of xmas on market for
strawberries. Mostly in
context.
Comprehensive
explanation of the effect
of xmas on market for
strawberries in context.
Only minor errors in
economic terms
Uses appropriate
economic terms
 Links reasons for
increased demand to
shift of demand curve
to the right
 Links rise in price to
consumers bidding up
price due to the
shortage
 Links increase in price
to increase in Qs OR
benefit to producers
 Refers to the process
using Pe to P1, Qe to
Q1, D to D1 and
consistent with the
changes shown on
graph
 Links reasons for
increased demand to
shift of demand curve
to the right
 Links rise in price to
consumers bidding up
price due to the
shortage
 Links increase in price
to increase in Qs or
benefit to producers
 Refers to the process
using Pe to P1, Qe to
Q1, D to D1 and
consistent with the
changes shown on
graph
N0 = no response or no relevant evidence
© NZCETA 2014 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) Price ($)
E
New Zealand Strawberry Market Week before Xmas
5
S
4.5
4
Pe
3.5
3
Pmax2.5
2
D
1.5
1
0.5
shortage
0
0
1000
2000
3000
4000
Qs
5000
Qe
6000
7000
8000
Qd
Quantity (boxes)
(b)




The price will fall from $3.50 to $2.50, Pe to Pmax, as the government has set a
maximum price at $2.50 so this is the highest price that can be charged
The lower price Pmax makes strawberries more affordable for consumers so the
quantity demanded increases, Qe – Qd., increasing 2000. This results in a
shortage of 3000 boxes of strawberries as Qd>Qs
While the Qd for strawberries is 7000, only 4000 will be purchased as this is the
resulting Qs, so only 4000 are available. At a price of 2.5, this results in total
consumer spending on strawberries to be $10,000. Spending before the control
was $17,500, so consumer spending has decreased by $7,500.
Possible flow on effects
o
o
o
Some consumers will miss out on strawberries even though they were
prepared to pay the market price due to the shortage
Some consumers may try to purchase strawberries on a black market,
paying higher than the maximum price set
Consumers may look for other fruit to use for their Christmas dessert, such
as kiwi fruit
© NZCETA 2014 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
Shows partial
understanding with only
TWO of:
 labels Pe and Qe
correctly
 labels Qd correctly
 labels Qs correctly
 labels shortage
correctly.
N2
Shows partial
understanding with
THREE of:
 labels Pe and Qe
correctly
 labels Qd correctly
 labels Qs correctly
 labels shortage
correctly.
A3
Shows understanding
with THREE of:
 labels Pe and Qe
correctly
 labels Qd correctly
 labels Qs correctly
 labels shortage
correctly
AND states
TWO of:
 price decreasing
 quantity demanded
increasing
 actual quantity
consumed
decreasing
 consumer spending
decreasing.
A4
Shows breadth of
understanding with
THREE of:
 labels Pe and Qe
correctly
 labels Qd correctly
 labels Qs correctly
 labels shortage
correctly
AND states
THREE of:
 price decreasing
 quantity demanded
increasing
 actual quantity
consumed
decreasing
 consumer spending
decreasing.
M5
M6
E7
Detailed explanation of
effect of maximum price
with ALL of:
 labels Pe and Qe
correctly
 labels Qd correctly
 labels Qs correctly
 labels shortage
correctly
AND explains TWO of:
 price decreasing
 quantity demanded
increasing
 actual quantity
consumed
decreasing
 consumer spending
decreasing.
 ONE flow-on effect
Detailed explanation of
effect of maximum price
with ALL of:
 labels Pe and Qe
correctly
 labels Qd correctly
 labels Qs correctly
 labels shortage
correctly
AND explains THREE
of:
 price decreasing
 quantity demanded
increasing
 actual quantity
consumed
decreasing
 consumer spending
decreasing.
 ONE flow-on effect
Comprehensive
explanation of the effect
of maximum price by
explaining
 change in consumer
spending
 change in price
 the difference between
change in quantity
demanded and actual
quantity consumed
 ONE flow-on effects
Figures mostly
correct.
E8
Comprehensive
explanation of the effect
of maximum price by
explaining
 change in consumer
spending
AND TWO of:
 change in price
 the difference between
change in quantity
demanded and actual
quantity consumed
 TWO flow-on effects
Figures and economic
terms are correct.
N0 = no response or no relevant evidence
© NZCETA 2014 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
FOUR
(a)
Price
($/boxes)
New Zealand Strawberry Market Week before Xmas
5
S
4.5
Ssu
4
Pe 3.5
P1
3
2.5
2
D
1.5
1
0.5
0
0
1000
2000
3000
4000
5000
6000
Qe
Q1
7000
8000
Quantity (boxes)
(b)

Quantity of strawberries consumers buy before and after the subsidy
Before:5000(boxes)

Price paid by consumers before and after the subsidy
Before: $3.50

After: $3
Price received by producers before and after the subsidy
Before: $3.50

After:6000(boxes)
After: $ 4.50
Total cost of the subsidy to the government. (Show working)
6000 X 1.50 = 9000
(c)
The effect of the subsidy is to lower the price paid by the consumer for a box of
strawberries Pe-P1 from $3.50 to $3. As strawberries are now more affordable they will
increase Qd, Qe to Q1, 5000 to 6000 boxes, so they will purchase more boxes of
strawberries. This means their expenditure on strawberries will actually increase from
© NZCETA 2014 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.
$17500 to $18000.
The supplier receives an increased price as the receive the $3 paid by the consumer,
plus the $1.50 subsidy from the government, resulting in a total price received of $4.50,
which is $1 more than Pe. As a result the Qs of strawberries increases Qe – Q1, 5000 to
6000. The producers revenue will increase as they are selling more and receiving a
higher price, so their revenue will increase from $17500 to $27000
The immediate impact on the government will be paying for the subsidy, which costs
$1.50 @ 6000 = $9,000 which will require more taxes or cutting spending in other areas,
such as education.
In the long run, more strawberries are consumed, which is likely to have a positive
impact on health, reducing government health care costs.
© NZCETA 2014 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
Shows partial
understanding with only
ONE of:
 shifts the supply
curve to the right
 labels a lower price
 labels a higher
quantity.
N2
Shows partial
understanding with
TWO of:
 shifts the supply
curve to the right
 labels a lower price
 labels a higher
quantity.
A3
Shows understanding
with ALL of:
 shifts the supply
curve to the right
 labels a lower price
 labels a higher
quantity.
A4
M5
M6
E7
E8
Shows breadth of
understanding with ALL
of:
 shifts the supply
curve to the right
correctly
 labels a lower price
 labels a higher
quantity
AND TWO of:
 quantity consumers
buy before and after
 price consumers pay
before and after
 price strawberry
growers receive
before and after
 cost of subsidy to
government.
(Allow for carry-through
errors.)
Detailed explanation of
effect of subsidy.
 Shifts S to the right
correctly
AND
Explains by correctly
stating THREE of:
 quantity consumers
buy before and after
 price consumers pay
before and after
 price strawberry
growers receive
before and after
 cost of subsidy to
government.
Detailed explanation of
effect of subsidy.
 Shifts S to the right
correctly
AND
Explains by correctly
stating FOUR of:
 quantity consumers
buy before and after
 price consumers pay
before and after
 price strawberry
growers receive
before and after
 cost of subsidy to
government.
Comprehensive
explanation of the effect
of subsidy by
explaining:
 change in price
consumers pay
before and after
 change in price
strawberry growers
receive before and
after
 cost of subsidy to
government
 the longer term
benefit to
government.
Figures must be correct
on page before (but do
not need to be repeated
here)
Only minor errors in
use of economic terms.
Comprehensive
explanation of the effect
of subsidy by
explaining:
 change in price
consumers pay
before and after
 change in price
strawberry growers
receive before and
after
 cost of subsidy to
government
 the longer term
benefit to
government.
Figures and economic
terms are correct, and
at least two figures
cited in the paragraph.
N0 = no response or no relevant evidence
© NZCETA 2014 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
0-8
9 - 17
18 - 24
25 - 32
© NZCETA 2014 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.