Productivity has declined recently in Finland, especially in the public sector. The country also has a fairly large number of small firms. In recent years, the price elasticity of demand and the price elasticity of supply for the products made by Finnish firms have altered.
(a)[2]
State the difference between the private sector and the public sector?
(b)[4]
Explain two reasons why productivity might decrease.
(c)[6]
Analyse how an increase in the price elasticity of demand (PED) and the price elasticity of supply (PES) of its products could benefit a firm.
(d)[8]
Discuss whether small firms are likely to survive in the long run.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Resources are allocated in the private sector through market forces” …