Peru has been shifting in recent years from a mixed economic system towards a more market-based one. One result has been that more small firms have been started. The short-run objective of some small firms is profit maximisation, whereas others are focused on growth. In the long run, both of these objectives may be achieved. Some small firms expand into large firms that are quoted on their country’s stock exchange.
(a)[2]
Define ‘a mixed economy’.
(b)[4]
Explain why the growth of a firm may lead to profit maximisation in the long term.
(c)[6]
Analyse how a country’s stock exchange can benefit its economy.
(d)[8]
Discuss the benefits and drawbacks of small firms.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Private-sector businesses” …