90197 Describe the concept of supply Achievement Criteria Achievement Achievement with Merit Achievement 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.

90197 Supply (a) Define the law of supply. As the price of a good or service increases the quantity supplied increases. (Ceteris paribus) (b) Explain the difference between a change in supply and a change in quantity supplied. AME Correctly defined AME Full explanation including 2/3 reasons for the change in supply. A change in supply occurs when the factors which influence supply change i.e. cost of production, technology improvement, or a change in the price of an alternative good. This results in a shift of the supply curve. A change in quantity supplied occurs when the price of the good changes. This results in a movement along the supply curve.

(c) Use the information above to complete the supply schedule below AME Requirements: 1) correct combination of P and Q. 2) in ascending or descending order Plus 2 out of following 3: title price and quantity headings units on headings Supply Speedy Spokes supply of bicycles for the previous 6 months. Price $Quantity (bikes)

(d) Draw a fully labeled supply curve for Speedy Spokes on the grid below. AME Any four of six (including the supply curve).  Title  Accurately plotting  S label  Even scale of axes  Price axis labelled  Quantity axis labelled Supply Quantity S

90197 Supply (e) (i) Show the effects of an increase in the price of bicycles from $300 to $400 on Graph 1. Use dotted lines, labels and arrows. AME Movement up the curve from $300 to $400, using dotted lines and one of: arrows or appropriate labels Quantity S

(ii) Explain the effect of the increase in price from $300 to $400. Achievement: Quantity supplied will increase. Merit: As the price increases from $300 to $400 quantity supplied increases from 15 to 20 bicycles. At the higher price Speedy Spokes makes relatively more profit so is therefore willing to supply more. AME QS increases At a higher price the producer makes more profit Supply

(a) On the graph below show and fully label the effect on supply of the increase in wages of the workers at Speedy Spokes. (b) Fully explain the effect on the supply of bicycles of the increase in the cost of wages. AME Supply curve shifts left. Labels or arrows AME Supply decreases. Supply decreases due to the increase in wages (COP) Merit plus: less supplied at each price level or because it is now less profitable. Achievement: Supply will decrease Merit: Because the cost of production has increased due to the increase in wages, Excellence less is supplied at each price level; because it is now relatively less profitable Supply S S’ Q’ Q Q PPPP

(a) Describe how the Government can encourage the purchase and use of bicycles. The government will subsidise bicycles. AME Description includes subsidy Supply (b) Explain the effect of the government intervention on the supply of bicycles and the consequences for Speedy Spokes. AME Explanation of subsidy and application to Speedy Spokes. Merit plus: consequenc es for the business explained. Merit :The government subsidy on bicycles is paid to the producer to help them reduce the costs of production. It will result in the supply curve shifting to the right because the subsidy will reduce the cost of the bicycle to Speedy Spokes. The reduced cost can be passed on to the consumer which will reduce the price and encourage consumers to purchase a bicycle. Excellence: The consequence to Speedy Spokes is that they may have to employ and train more staff. Speedy Spokes may need to enlarge their store.

JUDGEMENT Achievement Achievement with Merit Achievement with Excellence 5 x A or better4 x M or E plus 3 x A, M, E 1 x E 3 x M or E plus 4 x A, M, E Describe the concept of supply