Achievement Standard (Sample)
Economics
90630 Understand the market and allocative efficiency
AME
Task
A1
One
(a)
A3
(b)
Achievement
Evidence
Supply curve is drawn to give an
equilibrium price of $30.
Supply curve
drawn as required
and labelled, with
the equilibrium
price and quantity
also labelled/
indicated.
Consumer surplus shaded/identified as area
below demand but above equilibrium price.
Consumer
Surplus correctly
identified.
P
Merit
Consumer Surplus
P*
D
Q
A1
(c)
Demand is shifted to the right and a new
equilibrium price and quantity are
identified.
All this correct.
A1
(d)
eg If price was to remain at $30, there would
be an excess demand for boxer shorts.
Consumers who have missed out on buying
boxer shorts will be prepared to pay a higher
price, which will attract extra production
from suppliers. This process continues until
the market is at the new equilibrium.
Excess demand is
identified at $30
and the concept of
price being bid up
until at new
equilibrium is
described.
A3,
M1
(e)
Idea of:
Identifies the
concept that the
market is still
allocatively
efficient as it is at
equilibrium.
A3
(f)
A2
Two
(a)
A2
The market is still allocatively efficient as it
is in equilibrium and consumer and
producer surplus are being maximised.
(b)
(c)
Idea of: Producer surplus is increased.
Responsiveness of quantity demanded to a
change in price.
Ed = –0.17, (negative is not required for
coefficient).
Price inelastic (circled).
Correctly stated.
General idea is
stated.
Both correct.
A full
explanation of
allocative
efficiency is
provided.
Excellence
A2
(d)
(e)
A2,
M2,
E
Thre
e (a)
Cross elasticity = +1.68
Substitutes (circled).
Both correct
Eg elastic because:
Identifies one
reason without
explanation.
Explains two
reasons (it is not
good enough to
simply state
‘luxury’ or ‘many
substitutes’,
further
explanation
must be given.
Identifies that
price should not
be raised without
reason.
A clear
explanation is
provided.
1. Restaurant meals are considered a
luxury item so, if the price rises, people do
not need to buy them.
2. There are many substitutes for
restaurant meals, such as takeaway food
or cooking at home, so people can easily
switch away.
Eg
A2,
M2,
E
(b)
A1
Four
(a)
A3
(b) (i) Sw line is moved up by $100 to $400 and
Curve shifted
correctly and
labelled.
A3
(b)(ii) SNZ line is moved down by $100 at each
Curve shifted
correctly and
labelled new
equilibrium P and
Q identified.
M1,
E
(c)(i)
 The tariff reduces imports by 4 000
whereas the subsidy reduces imports by
only 2 000.
(ii)
 Less allocative efficiency with both
policies as both the tax and the subsidy
will create a deadweight loss in the
market.
The owner should not increase the price of
meals. If demand is price elastic, then if the
price of meals is increased they will earn
less revenue in sales from meals as people
will switch away.
The equilibrium price identified as $500,
equilibrium quantity as 6 000, and the
level of imports as 8 000 (same for both
graphs).
labelled appropriately.
and every point. New equilibrium price
($450 approx.) and quantity (7 000
approx) are identified.
(iii)
 With a tariff, NZ consumers will be
worse off (as their consumer surplus is
reduced, they pay a higher price and
consume less) but with a subsidy the
consumer surplus remains the same (as
the price of imports is unchanged and
consumers still consume the same
quantity of cameras).
 NZ producers are better off under both
methods as their producer surplus is
increased as they sell more. In the case of
a tariff they sell at a higher price, and in
the case of the subsidy they sell more at
A fully developed
explanation is
provided for each
reason.
A comprehensive
explanation is
provided.
All correctly
identified.
Some of the
points
mentioned in the
evidence are
explained.
A comprehensive
analysis is
completed
covering most of
the points in the
evidence
(reference to
deadweight loss,
producer and
consumer surplus
is required) and a
policy option is
chosen and
justified.
the same price but also receive the
subsidy.
 Both policies may lead to more
employment in the camera industry in
New Zealand.
 NZ government will collect tariff
revenue from the tariff but will have to
pay money out for the subsidy.
Policy choice, eg tariff – both methods
increase producer surplus and create a loss of
efficiency. However, a tariff does not cost the
government money and reduces imports by
more. This outweighs the loss in consumer
surplus associated with a tariff.
Sufficiency Indicator
Judgement Statement
Achievement (A)
Describe and illustrate market equilibrium.
Any two A1s or better.
Use concepts of demand, supply and elasticity.
Any three A2s or better.
Use supply and demand analysis to illustrate the
efficiency of markets.
Any three A3s or better.
Merit (M)
Explain the effects of a change in the market.
Achieved plus any three M1 or M2s or better.
Explain and apply the concepts of demand, supply and
elasticity.
Excellence (E)
Comprehensively analyse the effects of a change in the
market.
Merit plus one E from each of Questions Three and
Four (total of 2 E1).