90195 Describe concepts related to consumer choice and demand

Achievement Criteria

AchievementAchievement with

MeritAchievement with

Excellence

Describe concepts related to consumer choice and demand.

Explain concepts related to consumer choice and demand.

Explain concepts related to consumer choice and fully explain the concepts related to demand.

90195 Demand

(a) Describe the concept of limited means.

Not enough time, resources, money, skills

(b) Use the resource material to describe how Matthew is affected by his limited means.

A M E

Limited means described

A M E

Matthew’s limited means described

Matthew has limited time to play in the band, to play rugby league and to work at The Warehouse.

90195 Demand

(c) Use an economic concept to describe what Matthew has to do as a result of his limited means.

They have to make a choice/decision about working at The Warehouse or going to rugby league practice

(d) Define opportunity cost.

A M E

Must refer to choice or decision

A M E

Correct definition

The next best alternative given up/forgone.

90195 Demand

(e) Explain the opportunity cost for Matthew if he goes to league practice.

If Matthew chooses to go to rugby league practice he must give up his job at The Warehouse on Thursday night. The job at The Warehouse is the opportunity cost (or vice versa).

A M E

Opportunity cost explained using the context of the question.

90195 Demand

(a) Identify TWO factors that may affect Ben’s demand for a guitar.

Income, Tastes and preferences, brand; Product features – points of difference from other brands.(NOT price)

(b) Explain why price might not be the most important factor affecting Ben’s demand for a guitar.

A M E

Two factors required.

A M E

Particular sound/brand

Price is only one factor to consider

Wants a particular sound; or particular brand, Price is only one factor to consider.

90195 Demand

(c) Ben must decide between an electric guitar and an acoustic guitar. What is the economic term for the relationship between an electric guitar and an acoustic guitar?

Substitutes

(d) Explain how an increase in the price of acoustic guitars may affect the demand for electric guitars.

A M E

Correct term

A M E

Increase in price of acoustic guitars will increase demand for electric guitars.

Electric guitars will be relatively cheaper than acoustic guitars.

An increase in the price of acoustic guitars will increase the demand for electric guitars.(A).Electric guitars will be relatively cheaper than acoustic guitars. Some consumers will buy electric guitars rather than acoustic guitars.(M)

90195 Demand

(a) Use the information provided to fill in the demand schedule illustrating the band’s weekly demand for muffins.

A M E

Correct Titles and:

3/5 correct prices/

quantities

The band’s weekly Demand for Muffins

Price ($) Quantity

1.00 24

1.20 20

1.40 18

1.60 16

1.80 12

90195 Demand

(b) Use the information from the demand schedule to draw a fully labelled graph to show the band’s weekly demand for muffins.

A M E

FOUR of: title Accurately

plotted points Must be ruled D label Even scale of

axis Price axis label

Qty axis label.

(c) (i) On Graph 1 above, show the effect of a price decrease from $1.40 to $1.20. Fully label the changes using labels, dotted lines and arrows.

Price ($)

1.80

1.60

1.40

1.20

1.00

0 4 8 12 16 20 24 Quantity

D

The band’s weekly demand curve for muffins

P

P’

Q Q’

Lines, labels, OR arrows are used to show the price increase.

plus change in price and quantity labelled

90195 Demand

(ii) Explain the effect of this price decrease on the quantity demanded.

Quantity demanded increases. As the price decreases from $1.40 to $1.20 QD increases from 18 to 20 muffins. At a lower price the band can afford to purchase more muffins because they are now relatively cheaper.

A M E

QD increases

Increase of 2 muffins and the idea that at lower price consumer can afford more.

90195 Demand

(d) (i) Show the effect of the increase in income on the band’s demand for recording studio time on Graph 2.

(ii) Explain the effect of an increase in income on the demand for recording studio time.

A M E

Must show a new labelled curve to the right.

A M E

Increase in income results in increase in demand for studio time,

The income of the band has increased so they are able to demand more studio time to record their music.

Price

D

Quantity

D’

90195 Demand

A M E

Merit for (c)(i), (c)(ii) and (d)(ii)

90195 Demand

(e) (i) Graph 3 shows the demand for DVDs which store the recorded sound. Show and fully label the effect of the decreased price of recording studio time on the demand for DVDs.

A M E

Must show a new labelled curve to the right.

P

D1

D

90195 Demand

(e) (ii) Fully explain the effect of an increase in demand for recording studio time on the demand for DVDs.

The recording studio time and DVDs are complements. As studio time has decreased in price the quantity demanded for studio time has increased, and the demand for DVDs has increased because studio time and DVDs are used together.

A M E

Correctly states increase and gives a valid explanation linking the demand of studio time with the increased demand for DVDs

Uses correct economic terms – complements, increase in quantity demanded and increase in demand

90195 Demand

(a) Define disposable income.

Income after tax is paid

(b) Explain, using examples, what necessities are.

A M E

Accurate definition

A M E

Accurate description

Accurate description with examples

Basic goods essential to provide a minimum standard of living eg food, clothing, shelter.

90195 Demand

(c) Fully explain what has happened to the proportion of income which is spent on necessities from 2007 to 2008.

As income has increased the proportion spent on necessities has decreased. Income has increased by 100% but the spending on necessities has only increased by 25% This is because there is a limited amount of necessities that can be purchased.

A M E

The proportion spent on necessities decreases as income increases. Uses the information from the table. i.e as income has increased by 100% spending on necessities has increased by 25%.

As for merit plus an explanation of the reason for the less than proportionate increase in spending. i.e. there is a limited amount of necessities that are required.

90195 Describe concepts related to consumer choice and demand

JUDGEMENT

AchievementAchievement with

MeritAchievement with

Excellence

7 x A or better Achieved plus:4 x M or better

Merit plus:2 x E