Economics - annotated exemplars level 3 AS91401

Demonstrate understanding of micro-economic concepts (3.3)

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This annotated exemplar is intended for teacher use only. The student work shown does not always represent a complete sample of what is required. Selected extracts are used, focused on the grade boundaries, in order to assist assessors to make judgements at the national standard.

Low Excellence

Commentary
Student work extract

Student 1 (PDF, 228KB)

For Excellence, the student needs to demonstrate comprehensive understanding of micro-economic concepts.

This involves using a detailed explanation, supported by models and data, and/or information to justify implications of micro-economic concepts for consumer(s), producer(s) and/or government.

This student has explained in detail how Diminishing Marginal Returns links to supply, supported by data and an accurate model plotted from the data, and the the supply curve is derived from the MC curve (1).

The student has presented changes on economic models, and used them in a detailed explanation to justify the implications of increased costs of production, due to high dairy prices, for a producer of chocolate (2).

The student has presented economic information, and used this information to justify the implications of increased costs of production for a producer of chocolate in a detailed explanation (3).

For a more secure Excellence, the student could further explain the links between MC and the new supply curve (4).

For example, the student could state the marginal cost will increase for each additional unit as greater amounts of dairy cost is needed to produce each additional unit. MC shifts to MC1 due to the higher cost of each unit. Supply would now be the MC1 curve above the shutdown point ‘Shutdown 1’ on the model, so supply has decreased.

High Merit

Commentary
Student work extract

Student 2 (PDF, 274KB)

For Merit, the student needs to demonstrate in-depth understanding of micro-economic concepts.

This involves:

  • providing a detailed explanation of micro-economic concepts
  • using an economic model(s) to support detailed explanation
  • using data or information to support detailed explanation.

The student has processed and presented data (utility and demand schedules for Up & Go), and used this data to support a detailed explanation of marginal utility (MU). The link between MU and price is explained using data from the table to support the answer (1).

The student has presented and used an economic model, to support a detailed explanation, and linked MU to the Law of Demand using data to support the explanation (2).

The student has used the utility-maximising rule (equimarginal principle), demonstrating how H could reach consumer equilibrium, where H’s total utility from the consumption of two or more goods is maximised (3).

The student has used the processed data from the utility and demand schedules for Up & Go to justify the implications of marginal and total utility for a producer in a detailed explanation (4).

To reach Excellence, the student could use processed data from the utility and demand schedules for Up & Go, and an economic model to justify the implications of marginal utility and demand for consumer H.

Low Merit

Commentary
Student work extract

Student 3 (PDF, 194KB)

For Merit, the student needs to demonstrate in-depth understanding of micro-economic concepts.

This involves:

  • providing a detailed explanation of micro-economic concepts
  • using an economic model(s) to support detailed explanation
  • using data or information to support detailed explanation.

This student has defined and explained the different features of duopoly, oligopoly and monopolistic competition market structures in detail (1).

The student has explained the ‘kinked’ demand curve of an oligopoly market structure, using an economic model and economic information about the pricing strategies used by the telecommunication firms to support a detailed explanation (2).

The student has explained other features of an oligopoly market structure and the firms’ preference for using non-price competition (3).

For a more secure Merit, the student could add further economic information about the telecommunication industry for a more detailed explanation of non-price competition.

For example, the student could add that Vodafone also diversified their mobile service by establishing a nationwide 4G network. Telecom followed on with their own 4G progress and 2degrees will do the same. Telecom established free Wi-Fi hotspots as their non-price method of attracting customers and increasing or retaining their market share.

High Achieved

Commentary
Student work extract

Student 4 (PDF, 376KB)

For Achieved, the student needs to demonstrate understanding of micro-economic concepts.

This involves:

  • providing an explanation of micro-economic concepts
  • using an economic model(s) to illustrate micro-economic concepts
  • processing and/or presenting data or information related to micro-economic concepts.

This student has presented data and economic theory (1), and calculated and interpreted the PED, XED, and YED coefficients to explain elasticity of demand in the context of demand for cow’s milk (2).

The student has created a demand curve from the data, and used the demand curve to illustrate the price elasticity of demand for cow’s milk (3).

To reach Merit, the student could use the total revenue model and data to demonstrate in-depth understanding, explaining how this supports the conclusion that the price elasticity of cows’ milk is relatively inelastic until price increases to $4.50, after that it becomes relatively elastic.

For example, the student could explain when price increases from $3.00 to $4.50, total revenue increases from $529.50 to $596.25. Prices above $4.50 lead to a decrease in total revenue, indicating that at prices exceeding $4.50 cows’ milk becomes relatively elastic.

Low Achieved

Commentary
Student work extract

Student 5 (PDF, 246KB)

For Achieved, the student needs to demonstrate understanding of micro-economic concepts.

This involves:

  • providing an explanation of micro-economic concepts
  • using an economic model(s) to illustrate micro-economic concepts
  • processing and/or presenting data or information related to micro-economic concepts.

This student has presented and used economic PES theory to explain elasticity of supply in the context of increased milk prices due to the dairy boom (1).

The student has used the PPC model to illustrate the elasticity of supply concept (2), and explained elasticity of supply in the momentary, short run and long run periods (3). 

For a more secure Achieved, the student could use the relevant parts of the presented economic information to calculate and interpret PES coefficients, adding more economic evidence to the explanation of elasticity of supply (4).

For example, the student could state that based on a 1% increase in QS, the PES coefficients using the FPI figures, show the supply of fresh milk could range between very inelastic to relatively inelastic within a short run period like a year (a season).

High Not Achieved

Commentary
Student work extract

Student 6 (PDF, 150KB)

For Achieved, the student needs to demonstrate understanding of micro-economic concepts.

This involves:

  • providing an explanation of micro-economic concepts
  • using an economic model(s) to illustrate micro-economic concepts
  • processing and/or presenting data or information related to micro-economic concepts.

This student has processed data and presented the economic theory of PED, XED and YED (1).

The student has calculated and interpreted the PED coefficients, and partially explained the concept of elasticity of demand using information from the survey (2).

To reach Achieved, the student could create a demand curve from the processed data, and use the demand curve to illustrate the price elasticity of demand for cow’s milk. Additionally, the XED and YED coefficients could also be calculated and interpreted, adding more economic evidence to the explanation of elasticity of demand.

 
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