Build a balanced judgement on whether combining markets with government action improves access and welfare without creating excessive costs, inefficiency or reduced enterprise.
The shape of Colombia's population pyramid is changing. The income distribution of this South American country, however, is not changing significantly. The country has one of the most unequal income distributions in the world. Some Colombians work in its footwear industry which produces shoes, sandals and boots. Although footwear is produced in the private sector, Colombia has a mixed economic system.
Discuss whether or not a mixed economic system will benefit the people who live in that economy.
In assessing each answer, use the table opposite.
Why it might:
- public goods may be provided
- production of demerit goods may be discouraged
- production of merit goods may be encouraged
- state benefits may be provided
- income may be redistributed to help the poor
- unemployment may be kept low by government policies
- private sector benefits e.g. generate high incomes / lower prices
Why it might not:
- may be market failure in the private sector
- rich may lose if there is high progressive taxation
- high taxation may discourage enterprise
- state-owned enterprises may be inefficient
- may be less choice in the public sector.
8
Level
3
2(d)
8
Level
Marks
1
There is a simple attempt at using economic definitions and terminology.
Some reference may be made to economic theory, with occasional understanding.
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