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Title / Apply elasticity concepts to the demand and supply model
Level / 5 / Credits / 2
Purpose / People credited with this unit standard are able to explain, and interpret the significance of, elasticity using the demand and supply model.
Classification / Economic Theory and Practice > Micro Economics
Available grade / Achieved
Explanatory notes
1Definition
Demand and supply model is a graphical demonstration, supported by a narrative giving reasons for shifts in demand or supply curves and consequential adjustments to price and output levels.
2References
Callander, Andrew, Understanding the Economic Environment, 2nd (or subsequent) ed. (Wellington: Lexis Nexis, 2004).
Stewart, James, Rankin, Keith, Economic Concepts and Applications: The Contemporary New Zealand Environment, 4th (or subsequent) ed. (Auckland: Pearson, 2008).
Outcomes and evidence requirements
Outcome 1
Explain elasticity using the demand and supply model.
Evidence requirements
1.1The explanation distinguishes between the different types of elasticity.
Rangeprice elasticity of demand, income elasticity of demand, cross elasticity of demand, price elasticity of supply;
calculations are not required.
1.2The explanation distinguishes between the degrees or values of elasticity.
Rangeelasticity, inelasticity, unitary elasticity;
calculations are not required.
Outcome 2
Interpret the significance of elasticity using the demand and supply model.
Rangeelasticity – includes any two of – price elasticity of demand, income elasticity of demand, cross elasticity of demand, price elasticity of supply.
Evidence requirements
2.1The interpretation establishes the impact of elasticity upon market equilibrium given shifts in demand and supply.
Rangeequilibrium includes – short-run, long-run.
2.2The interpretation establishes the significance of elasticity for pricing decisions in terms of revenue maximisation.
Rangepricing decisions – one of – price increase, price decrease;
elasticity – one of – elastic, inelastic, unitary elasticity.
Replacement information / This unit standard and unit standard 26010 replaced unit standard 8410.Planned review date / 31 December 2019
Status information and last date for assessment for superseded versions
Process / Version / Date / Last Date for AssessmentRegistration / 1 / 16 October 2009 / 31 December 2016
Rollover and Revision / 2 / 16 April 2015 / N/A
Consent and Moderation Requirements (CMR) reference / 0116
This CMR can be accessed at
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Requirements for consent to assess and an outline of the moderation system that applies to this standard are outlined in the Consent and Moderation Requirements (CMR). The CMR also includes useful information about special requirements for organisations wishing to develop education and training programmes, such as minimum qualifications for tutors and assessors, and special resource requirements.
Comments on this unit standard
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NZQA National Qualifications ServicesSSB Code 130301 / New Zealand Qualifications Authority 2018