NCEA Level 3 Economics (90631) 2012 — page 1 of 6
Assessment Schedule – 2012
Economics: Describe market failure and government interventions to correct for market failure (90631)
Evidence Statement
The following Economics-specific marking conventions are used in this assessment schedule:
• I
means identify
• E
means explain
• Q
means refer to the question
• J
means justification.
Question
Evidence
ONE
Achievement
Achievement
with Merit
Any ONE of:
• Qs Ps correct
Part A
(a)
See Appendix One.
(b)
Non-excludable means that it is not
economically viable to stop/exclude non-payers
(free-riders) from using the resource if they do
not pay.
E – Link to National Parks, eg anyone can use
the National Parks even if they do not pay
Note: “free good” discussion is not acceptable.
• Non-excludable
described.
Achievement
with Excellence
Code
A1
• Non-excludable
explained with reference
to national parks.
OR
M1
NCEA Level 3 Economics (90631) 2012 — page 2 of 6
ONE
Any TWO of:
PL identified
The correct price set in (c)
A2
Part B
• PL identified
AND ONE of:
AND in (e):
OR
• Description of how
access fee would
achieve the capacity
quantity (I OR E)
• Explanation of how
access fee would
achieve the capacity
quantity (I AND E)
• A justified explanation of
which policy is more
equitable that has all of
I, E, J
M2
• Description of either
policy’s effect on equity.
• Explanation of access
fees’ effect on equity
(c)
See Appendix One.
(d)
I – The price set on the market will limit the
number of people wanting to use the national
parks to the desired capacity (quantity Q1).
E – The money raised from the access fee
could then be used to police the use by those
who haven’t paid, reducing the free-rider
problem.
(e)
Eg, Limit on Numbers chosen.
I – A limit on the number of users would still
allow everyone an equal chance to access the
national park, which is fair.
E – The access fee would limit the national
parks to those who can afford the fee.
J – The limit on the number of users is more
equitable than the fees as it is fair that all New
Zealanders should have equal access to New
Zealand’s national parks.
OR
Eg “Access Fee”
I – access fee is equitable because people can
go whenever they like. All they have to do is pay
for it.
E – a limit is unfair because people might want
to use it but it’s already full OR it is impossible
to decide who should/should not access it.
J – an access fee is more fair as a limit requires
taxpayer money and those who don’t go are
paying through their taxes which is unfair.
• Explanation of limit on
numbers’ effect on
equity.
AND
• No significant economic
errors.
OR
E2
NCEA Level 3 Economics (90631) 2012 — page 3 of 6
Question
Evidence
TWO
Achievement
Any ONE of:
Part A
• SMB correct on graph and
QS correct on graph
(a)
(i) and (ii) – See Appendix Two.
(b)
I – If the market remains at Qe the
consumers of fast food have not
considered the spillover effects of their
consumption on society (eg, increased
health costs from obesity).
• A partial answer that
describes why the market
fails at Qe.
EITHER the I OR E point
OR has BOTH, but may
also have a significant
error.
E – If private individuals considered the
spillover effects on society then they
would choose to consume less than Qe
as the overall benefit of consuming is
less.
Q – meaning the gains to the consumer +
society + producer would be greater.
NOT obesity / health problems, as this is
demerit good explanation but the impact
of these on society.
Achievement
with Merit
• Explanation of why the
market fails at Qe. Has
BOTH I AND E (Q) in
explanation.
Has a suitable spill-over,
or clear reference to Graph
Two, eg at MSB the
consumption should be at
Qs – which is lower than
the private consumption of
Qe, as Qs takes into
account the spill-over
effects of consumption on
society.
Achievement
with Excellence
Code
A1
OR
M1
NCEA Level 3 Economics (90631) 2012 — page 4 of 6
TWO
Part B
(c)
I – Limiting the number of fast food
outlets would increase the overall cost of
consuming fast food by making it more
expensive to travel to find the outlets
OR
Will decrease the supply of fast food
outlets which will increase the price.
E – This will mean that people will
choose to consume less fast food shifting
the quantity consumed from Qe to Qs.
Q – Meaning the social equilibrium
quantity can be achieved.
(d)
Some possible policies:
I – a tax on fast foods is added to the
producers’ costs causing the price to rise
E – at the higher price consumers would
choose to buy Qs, which would achieve
the social equilibrium quantity
I – subsidising / promoting healthy foods
would decrease the price of the
substitute
E – so people would choose to consume
more of the relatively cheaper substitute
and less fast food, so quantity falls to Qs
I – advertising the bad effects of fast food
will decrease the demand for fast food
E – so people choose to consume less
(Qs) at the current price.
Any TWO of:
Any ONE of:
• a partial answer that
describes how the policy
achieves the social
equilibrium quantity
EITHER the I OR E point
OR has BOTH, but may
also have a significant
error
• explains how the limit on
outlets achieves the social
equilibrium quantity. Both
the I AND E(Q) point
• suitable description of an
alternative policy that
shows how less will be
consumed I OR E
• describes how the policy
chosen is more efficient /
effective that has I OR
E OR J.
• explains how the
alternative policy could
achieve the social
equilibrium quantity. Both
the I AND E(Q) point
• an explanation of which
policy is more efficient that
has all of I AND E in (e).
A justified explanation of
which policy is more efficient
that has all of I, E, J
AND
No significant economic
errors.
A2
OR
M2
OR
E2
NCEA Level 3 Economics (90631) 2012 — page 5 of 6
(e)
Eg, Tax on fast food chosen.
I – A tax on fast foods would be added to
producers’ price, causing the price to
rise. At the higher price, consumers
would choose to buy Qs, which would
achieve the social equilibrium quantity.
E – the tax is more efficient as limiting
the number of fast food places in an area
would not guarantee that consumers
would choose to consume less fast food
as an appropriately sited outlet could still
potentially meet all customer demand.
J – So the tax is a more efficient policy as
it is more likely to cause the required
change in consumption to achieve the
social equilibrium quantity OR will
generate income for the government to
carry out other initiatives targeting
obesity.
NCEA Level 3 Economics (90631) 2012 — page 6 of 6
Appendix One – Question One (a), (c)
Appendix Two – Question Two (a)
Judgement Statement
Achievement
Achievement with Merit
Achievement with Excellence
Minimum of:
Minimum of:
Minimum of:
1 A1
1 M1
1 M1
1 A2
1 M2
1 E2
Codes:
A1 and M1 refer to the first criterion.
A2, M2, and E2 refer to the second criterion.
I means identify.
E means explain.
Q means refer to the question.
J means justification.