A-LevelEconomicsGovernment microeconomic intervention9708/42 · Feb/Mar 2018 · Q325 Marks
Explain what is meant by equity, allocative efficiency and Pareto optimality. Consider whether they are linked.
- (a)Explain what is meant by equity, allocative efficiency and Pareto optimality. Consider whether they are linked.[12]
- (b)Discuss whether a better use of resources is always achieved if there is a market structure in which firms remain small.[13]
Mark scheme
Marking points from the official mark scheme (Feb/Mar 2018). The mark or mark type is shown in brackets.
- Equity – fairness; efficiency – making best use of available resources; Pareto – cannot make someone better off without making someone else worse off. Allocative efficiency and Pareto are linked. There is no link to equity – Pareto optimality does not necessarily imply equity.
- L4 (9-12) for a clear explanation of all three terms and a conclusion about the links
- Discussion of the merits of small firms, which type of market makes them successful and a discussion of the merits of larger companies – economies of scale – with a conclusion about the relative strengths and weaknesses of both small and large firms.
- L4 (9-13) for a discussion of both types with positive and negative aspects; up to 10 with no conclusion
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