Number

AS90629

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Page 1 of 3

Achievement Standard
Subject Reference Title Level Subfield Domain Status Planned review date 3 Economics 3.1 Understand marginal analysis and the behaviour of firms Credits 5 Assessment External

Economic Theory and Practice Economics Registered 28 February 2009 Status date Date version published 6 November 2006 6 November 2006

This achievement standard involves describing the behaviour of firms and the different markets in which they operate, recognising marginal concepts that relate to supply and demand, and using marginal analysis to recognise equilibrium for the firm. Achievement Criteria Achievement Describe the behaviour of firms and the different markets in which they operate. Recognise marginal concepts that relate to supply and demand. Use marginal analysis to recognise equilibrium for the perfectly competitive firm or the monopolist. Achievement with Merit Describe the behaviour of firms and the different markets in which they operate. Use marginal analysis to derive the supply or demand curve. Use marginal analysis to explain equilibrium for the perfectly competitive firm or the monopolist in different markets. Achievement with Excellence Describe the behaviour of firms and the different markets in which they operate. Use marginal analysis to derive supply or demand curves. Use marginal analysis to fully explain changes in output and pricing decisions for the perfectly competitive firm or the monopolist in different markets.

Explanatory Notes 1 This achievement standard is related to Economics, Forms 3 to 7: Syllabus for Schools, Learning Media, Ministry of Education, 1990, pp. 3637.

New Zealand Qualifications Authority 2006

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AS90629

Version

Page 2 of 3

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 identify a key idea and to say why or how, give reasons for, predict, interpret, compare, distinguish in the context given. Fully explain means to explain in depth and/or breadth. The description of the behaviour of firms and the different markets in which they operate, will involve a selection from: monopoly, perfect competition, duopoly, oligopoly, monopolistic competition, and monopsony domestic examples of firms in these markets non-price marketing strategies that firms use product differentiation with domestic examples under different markets alternative strategies other than short-term profit maximisation (eg sales maximisation). Recognition of marginal concepts that relate to supply and demand will involve a selection from: the law of diminishing marginal utility the optimal purchase rule and consumer equilibrium intuitive derivation of individual demand curve using marginal utility accounting and economic (opportunity) costs the law of diminishing returns to show its relationship to increasing costs, the shape of the marginal cost curve and supply for the perfect competitor short-run average, marginal and total cost concepts and their relationships. Use of marginal analysis to recognise or explain equilibrium for the perfectly competitive firm or the monopolist will involve a selection from: average and marginal revenue and their relationships marginal analysis to determine output and pricing decisions short- or long-run equilibrium positions. Use of marginal analysis for achievement with excellence will involve a further selection from: a thorough understanding of the application of marginal analysis to explain changes in a given situation a full discussion of the application of marginal analysis to explain changes in the short- and long-run.

New Zealand Qualifications Authority 2006

Number

AS90629

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 2006