'Free markets make the most efficient use of resources and are the foundation of a successful economy.' To what extent do you agree with this?

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2019). The mark or mark type is shown in brackets.

1. A definition of a free market and the concepts of productive and allocative efficiency. Discussion of reasons for market failure, Imperfect knowledge, inequality, friction within a market, externalities.
2. Note: All types of efficiency together to be regarded as one type of market failure.
3. L4 (18-25 marks): For a thorough discussion which covers a good understanding of productive and allocative efficiency produced by markets. A good explanation of 2 forms of market failure which consider the impact on efficiency. A conclusion will be drawn that refers to a successful economy. (Max. 21 no conclusion).
4. L3 (14-17 marks): For a competent discussion of productive and allocative efficiency produced by perfect markets. A limited explanation of 2 forms of market failure.
5. L2 (10-13 marks): For an accurate though undeveloped explanation of efficiencies or market failures.
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.