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Educating Young People Who Will Be Significantly Different! 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.