Street vendors usually work outside the formal economy in order to avoid government regulation. Yet many are now moving into the formal economy. As a result, government revenue has risen, productivity has increased and economic growth has become higher. Some governments intend to introduce measures to raise the number of firms in the economy.
(a)[2]
Identify two reasons why workers may choose to work in the formal economy.
(b)[4]
Explain two effects of economic growth on a country’s population.
(c)[6]
Analyse how government regulation can reduce market failure.
(d)[8]
Discuss whether or not a rise in the number of firms will benefit an economy.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “higher earnings in the formal economy” …