Discuss whether competitive markets in the private sector are the best way to achieve an efficient allocation of resources.

Mark scheme

Marking points from the official mark scheme (May/June 2020). The mark or mark type is shown in brackets.

1. [25] Explanation of efficiency. Discussion of what is meant by competitive markets and whether this means only perfect competition. Efficiency is achieved in perfect competition but other competitive markets may not and individual actions are not always best for society as a whole. Discussion of reasons for market failure and necessity/desirability of government intervention to achieve efficiency.
2. [18-25] For an accurate discussion of efficiency, competition and market failure, with examples and a conclusion about the need for government intervention. No conclusion - maximum 21.
3. [14-17] For a competent explanation of productive and allocative efficiency and more limited discussion of different competitive markets. Still expect a consideration of the reasons for market failure and the need for government.
4. [10-13] For a briefer analysis of efficiency and of market failure with few examples and no comment about different types of competitive markets. No conclusion.
5. [1-9] For an answer that has some basic correct facts but includes irrelevancies and errors of theory.