Several firms in Monaco have already expanded through external growth. Wages in Monaco are high. Workers there also gain from fiscal policy that helps to keep employment high. The government does charge VAT on food, including fruit. Some economists have argued that, rather than taxing fruit, governments ought to give consumers free fruit.
(a)[2]
Define external growth for firms.
(b)[4]
Explain two reasons why low-skilled workers might receive high pay.
(c)[6]
Analyse how fiscal policy may raise employment.
(d)[8]
Discuss whether a government ought to provide consumers with free fruit.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “A rise in a firm's size or output caused by a merger or takeover” …