Practise explaining how markets and central planning allocate scarce resources and assessing when mixed-economy intervention improves efficiency, equity or provision of goods.
Discuss the way in which resources are allocated in planned economies and free market economies. Consider which type of economic system is likely to have the more beneficial outcome.
For Analysis:
That explains how resources are allocated in centrally -planned economies including the strengths and weaknesses of this system. (Up to 4 marks)
That explains how resources are allocated in free market economies including the strengths and weaknesses of this system.
(Up to 4 marks)
8 marks maximum
For Evaluation:
That exercises some judgement in considering which type of economy would have more benefit. This must make use of the analysis that is offered. There must be a conclusion for full marks.
4 marks maximum
12
In a centrally planned economy the price
mechanism does not exist. Central and regional planning committees allocate resources. In free market economies resources are allocated by the market mechanism with a
very limited role for the government. The weaknesses of each system often lead to the
conclusion that the mixed economy is most
beneficial.