Productivity has recently declined in Finland, especially in the public sector. The country also has a comparatively large number of small firms. In recent years, the price elasticity of demand and the price elasticity of supply of the goods produced by Finnish firms have altered.
(a)[2]
How does the private sector differ from the public sector?
(b)[4]
Explain two reasons why productivity might decline.
(c)[6]
Analyse how an increase in the price elasticity of demand (PED) and the price elasticity of supply (PES) of its products might help a firm.
(d)[8]
Discuss whether small firms are likely to survive over the long term.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “The private sector is the part of the economy in which resources are allocated by market forces / price mechanism / the decisions of producers and consumers” …