The merit of the economic theory of wage determination is that it clearly shows what the best level of wage rates should be and thus is evidence that there is no need for either the government or trades unions to fix wages. Discuss this assertion.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2017). The mark or mark type is shown in brackets.

1. [25] Analysis of wage determination and employment levels. Consideration of perfect and imperfect markets. Discussion of meaning of 'best level' – for whom? (worker, employer) with relation to what? (Employment levels, wages, productivity, efficiency of firm, safety issues?) For whom?
2. L4 for a thorough critique of the statement and an explanation of the analysis of wage determination with a clear comparison of perfect and imperfect markets. A sound discussion about meaning of 'best'. Max 21 no conclusion. 18–25
3. L3 for a weaker critique of the statement but a competent explanation of imperfect market wage determination and a consideration of the meaning of 'best'. Max L3 if no MRP. 14–17
4. L2 for a correct but undeveloped analysis with only a brief comment and recognition of the range of relevant issues to consider. 10–13
5. L1 for an answer that shows some knowledge but does not indicate that the question has been fully grasped or where the answer is mostly irrelevant 1–9