Section B Answer one question. You may answer with reference to your own economy or other economies that you have studied where relevant to the question. (a) Explain the different ways in which resources are allocated in a market economy and in a mixed economy. (b) Discuss the effectiveness of supply-side policies in increasing the supply of enterprise to the economy.

Mark scheme

Marking points from the official mark scheme (May/June 2018). The mark or mark type is shown in brackets.

1. [1] Resources are allocated through the price mechanism in a free market economy
2. [3] Elaboration of free market allocation in terms of supply and demand, consumer sovereignty, enterprise and the profit motive (Up to 3 marks).
3. [1] Resources are allocated through the price mechanism and the government in a mixed economy
4. [3] Elaboration of mixed economy allocation in terms of public and merit goods, intervention in markets such as indirect taxes on demerit goods and so on (Up to 3 marks).
5. [4] Explanation of how any supply side policies can increase the supply of enterprise to the economy (Up to 4 marks)
6. [4] Explanation of the difficulties associated with the application of these policies (Up to 4 marks)
7. [3] Evaluative comment on the effectiveness of supply-side policies
8. [1] Reasoned conclusion on the overall effectiveness of the policies