NZQA registered unit standard
26012 version 2
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Title
Analyse the behaviour and performance of firms in different market
structures
Level
5
Credits
6
Purpose
People credited with this unit standard are able to: analyse the
behaviour of the short-run costs of production, and the
relationship between cost and production in the long-run, using
economic principles; explain the behaviour of firms operating
under perfect competition, under monopoly market structure,
under a monopolistically competitive market structure, and
under an oligopolistic market structure; and evaluate the
performance of firms under different market structures.
Classification
Economic Theory and Practice > Micro Economics
Available grade
Achieved
Explanatory notes
1
Definition
Equilibrium of the firm is that output level which maximises profit (given by the
condition MR = MC).
2
References
Callander, Andrew, Understanding the Economic Environment, 2nd (or subsequent)
ed. (Wellington: Lexis Nexis, 2004).
Stewart, James, Rankin, Keith, Economic Concepts and Applications: The
Contemporary New Zealand Environment, 4th (or subsequent) ed. (Auckland:
Pearson, 2008).
Outcomes and evidence requirements
Outcome 1
Analyse the behaviour of the short-run costs of production using economic principles.
Range
economic costs includes – accounting costs, opportunity costs;
short-run costs includes – variable cost, fixed cost, average total cost, marginal
cost.
Evidence requirements
1.1
The analysis is illustrated by means of a graphical depiction consistent with cost
data.
NZQA National Qualifications Services
SSB Code 130301
 New Zealand Qualifications Authority 2016
NZQA registered unit standard
1.2
26012 version 2
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The analysis accounts for the inter relationships between output and costs in
terms of the law of diminishing returns and production capacity.
Outcome 2
Analyse the relationship between cost and production in the long-run using economic
principles.
Evidence requirements
2.1
The analysis establishes the shape of the long-run average costs curve,
consistent with least-cost production decisions.
Range
one of – graphical, numerical economies of scale, diseconomies of
scale.
Outcome 3
Explain the behaviour of firms operating under perfect competition.
Evidence requirements
3.1
The explanation highlights the features of a perfectly competitive market
structure.
Range
3.2
The explanation determines the short-run equilibrium of the firm consistent with
the profit maximisation condition.
Range
3.3
number of firms, product differentiation, control over price, extent
of market information, freedom of entry.
one of – graphical, numerical, algebraic;
one of – profit – normal, subnormal, supernormal.
The explanation predicts the long-run profit outcomes for the firm consistent
with profit maximising behaviour and industry equilibrium price movements.
Range
one of – short-run supernormal profit resulting in long-run normal
profit, short-run subnormal profit resulting in long-run normal profit.
Outcome 4
Explain the behaviour of firms operating under monopoly market structure.
Evidence requirements
4.1
The explanation highlights the features of a monopoly market structure.
Range
number of firms, product differentiation, control over price, extent
of market information, freedom of entry.
NZQA National Qualifications Services
SSB Code 130301
 New Zealand Qualifications Authority 2016
NZQA registered unit standard
4.2
The explanation determines short-run and long-run equilibrium of the firm,
consistent with the profit maximisation objective.
Range
4.3
26012 version 2
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one of – graphical, numerical, algebraic;
one of – profit – normal, subnormal, supernormal.
The explanation assesses the behaviour of monopoly in terms of its market
power.
Range
market power – barriers to entry, product differentiation, price
discrimination.
Outcome 5
Explain the behaviour of firms operating under a monopolistically competitive market
structure.
Evidence requirements
5.1
The explanation highlights the features of a monopolistically competitive market
structure.
Range
5.2
number of firms, product differentiation, control over price, extent
of market information, freedom of entry.
The explanation determines short-run and long-run equilibrium of the firm,
consistent with the profit maximisation objective.
Range
one of – graphical, numerical, algebraic;
one of – profit – normal, subnormal, supernormal.
Outcome 6
Explain the behaviour of firms operating under an oligopolistic market structure.
Evidence requirements
6.1
The explanation highlights the features of an oligopolistic market structure.
Range
6.2
number of firms, product differentiation, control over price, extent
of market information, freedom of entry.
Oligopoly behaviour is explained in terms of the market structure.
Range
price – interdependence, price leadership, price followership,
kinked demand curve model;
behaviour – advertising, output, product differentiation.
NZQA National Qualifications Services
SSB Code 130301
 New Zealand Qualifications Authority 2016
NZQA registered unit standard
26012 version 2
Page 4 of 5
Outcome 7
Evaluate the performance of firms under different market structures.
Evidence requirements
7.1
The evaluation assesses the performance of market structures.
two of – perfect competition, monopoly, oligopoly, monopolistic
competition;
two of – allocative efficiency, productive efficiency, quantity
produced, price, research and development, innovation, consumer
choice.
Range
7.2
The evaluation describes a contemporary example of government regulation
restricting the market power of firms.
Replacement information
This unit standard replaced unit standard 8412, unit
standard 8413, and unit standard 8414.
Planned review date
31 December 2019
Status information and last date for assessment for superseded versions
Process
Version Date
Last Date for Assessment
Registration
1
16 October 2009
31 December 2016
Rollover and
Revision
2
16 April 2015
N/A
Consent and Moderation Requirements (CMR) reference
0116
This CMR can be accessed at http://www.nzqa.govt.nz/framework/search/index.do.
Please note
Providers must be granted consent to assess against standards (accredited) by NZQA,
before they can report credits from assessment against unit standards or deliver courses
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Providers and Industry Training Organisations, which have been granted consent and
which are assessing against unit standards must engage with the moderation system that
applies to those standards.
Requirements for consent to assess and an outline of the moderation system that applies
to this standard are outlined in the Consent and Moderation Requirements (CMR). The
NZQA National Qualifications Services
SSB Code 130301
 New Zealand Qualifications Authority 2016
NZQA registered unit standard
26012 version 2
Page 5 of 5
CMR also includes useful information about special requirements for organisations wishing
to develop education and training programmes, such as minimum qualifications for tutors
and assessors, and special resource requirements.
Comments on this unit standard
Please contact NZQA National Qualifications Services nqs@nzqa.govt.nz if you wish to
suggest changes to the content of this unit standard.
NZQA National Qualifications Services
SSB Code 130301
 New Zealand Qualifications Authority 2016