Trade unions, minimum wage legislation and large powerful businesses invalidate the conclusions of the traditional economic theory of wage determination. The theory needs to be replaced. How far do you agree with this assertion?

Mark scheme

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

1. Candidates should consider each part of the statement. The theory of wage determination should be explained and a comment given on how the outcome may be affected by the existence of trade union bargaining, by minimum wages affecting the supply, by large monopsonies forcing down wages from the competitive level. A conclusion of the possible usefulness of the theory should be given.
2. L4 (18-25): for a critique of the statement and a thorough explanation of the analysis of wage determination with a clear comment on how unions, minimum wages and large monopsonistic businesses may be incorporated into the theory. There should be a conclusion and a well-structured answer. Must have MRP to reach L4.
3. L3 (14-17): for a weaker critique of the statement mentioning either all three elements less rigorously or two elements more fully. There should still be a competent explanation of imperfect markets together with a conclusion.
4. L2 (10-13): for a correct but undeveloped analysis with much briefer critique of the statement. Max 11 without a conclusion.
5. L1 (1-9): 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.