Explain the role of profit in an economy where the price mechanism operates to allocate resources.

Mark scheme

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

1. [4] For knowledge and understanding of: profit as the reward to the factor enterprise for organising the factors of production and taking the risk of production
2. [4] That shows how, motivated by profit, entrepreneurs allocate resources in response to price signals in a market economy.
3. [6] an explanation of the way in which resources are allocated in a planned economy with due reference to the strengths and weaknesses of allocation in this type of economy
4. [6] an explanation of the way in which resources are allocated in a market economy with due reference to the strengths and weaknesses of allocation in this type of economy
5. [3] For evaluation that assesses and compares the relative strengths and weaknesses of the allocation of resources in each economy
6. [1] and reaches a conclusion on which type of economy allocates resources most effectively.