'Government intervention in the microeconomy always improves efficiency.' Discuss the validity of this claim.

Mark scheme

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

1. Definitions of productive, allocative, dynamic efficiency, Pareto optimality.
2. Examples of market failures and relevant government intervention, taxes, subsidies direct provision. Government: under/over estimation of the problem, lack of information, time lag problem.
3. L4 (18-25 marks): For an accurate discussion based on definitions of efficiency and clearly linked to government microeconomic policy. The limitations of the government in achieving its aims are recognised. A conclusion is drawn. (Max 21 no conclusion).
4. L3 (14-17 marks): For an answer which explains two forms of efficiency and explains 2 types of government intervention. There is a limited conclusion: 16..
5. L2 (10-13 marks): For an accurate explanation based on a single form of efficiency and a limited reference to forms of government intervention.
6. L1 (1-9 marks): For an answer which shows some knowledge but does not indicate that the question has been fully grasped, or where the answer contains irrelevancies and errors of theory.