Number

AS90630

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Page 1 of 3

Achievement Standard
Subject Reference Title Level Subfield Domain 3 Economics 3.2 Describe an economic problem, allocative efficiency, and market responses to change Credits 4 Assessment External

Economic Theory and Practice Economics 16 November 2005 Date version published 16 November 2005

Registration date

This achievement standard involves describing an economic problem, allocative efficiency and market responses to change. Achievement Criteria Achievement Describe the economic problem. Describe allocative efficiency. Describe market responses to change. Achievement with Merit Describe the economic problem. Describe the effect of a change in the market on allocative efficiency. Explain market responses to change. Achievement with Excellence Describe the economic problem. Describe the effect of a change in the market on allocative efficiency. Fully explain different markets responses to changes.

Explanatory Notes 1 This achievement standard is related to Economics, Forms 3 to 7: Syllabus for Schools, Learning Media, Ministry of Education, 1990, p. 37. Definitions Describe means to give details about, an account of, relate, demonstrate knowledge of; students may give descriptions in words, diagrams, flow charts, graphs or other similar devices. Explain means to say why or how, give reasons for, predict, interpret, compare, distinguish. Fully explain means to explain in depth and/or breadth.

New Zealand Qualifications Authority 1937

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AS90630

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Page 2 of 3

The description of an economic problem will involve a selection from the: illustration of economic scarcity, choice, opportunity cost, diminishing returns, and the under-utilisation of resources with a production possibility curve shape of production possibility curves and their shifts opportunity cost role of markets and prices in determining resource allocation. The description of allocative efficiency will involve a selection from: market forces that will lead to market equilibrium gains to buyers (consumers surplus) and sellers (producers surplus) from reaching equilibrium how shifts in demand and supply affect equilibrium where the sum of consumers and producers surplus is maximised change imposed on the market equilibrium, the loss of allocative efficiency (deadweight loss). The description of how a market responds to change will involve a selection from: Demand construction of market demand curves by summing individual demand curves movements along, and shifts of, the demand curve reasons for shifts of demand curves. Supply construction of market supply curves from the supply curves of individual firms reasons for shifts of supply curves movements along a supply curve and shifts in the supply curve. Elasticity definitions of price elasticity of demand, cross elasticity of demand, income elasticity of demand and price elasticity of supply calculation of price elasticity of demand, cross elasticity of demand, income elasticity of demand and price elasticity of supply reasons for differing elasticities for different goods and services significance for firms in their pricing decisions supply responsiveness in the long term compared with the short term. Factor and commodity markets the concept of real wages, the effect of price level changes and controls in the labour market the incidence of a sales tax and a subsidy (elastic demand versus an inelastic demand) the market for an internationally traded commodity with exports and imports. When fully explaining how different markets respond to changes a further selection will be made from: the effects on all participants in the market, eg consumers, producers, government a full analysis, using supply and demand, of the impact on all of the different markets associated with the change.

New Zealand Qualifications Authority 1937

Number

AS90630

Version

Page 3 of 3

Quality Assurance 1 Providers and Industry Training Organisations must be accredited by the Qualifications Authority before they can register credits from assessment against achievement standards. Accredited providers and Industry Training Organisations assessing against achievement standards must engage with the moderation system that applies to those achievement standards. Accreditation and Moderation Action Plan (AMAP) reference 0226

New Zealand Qualifications Authority 1937