In Greece, wealthier households spend more than the typical household. The level of spending in an economy helps determine whether its production point lies on or inside its production possibility curve (PPC). In 2020, household spending in Greece decreased. That influenced some firms’ merger plans. It also raised unemployment. More than half of Greece’s unemployed had been out of work for over a year.
(a)[2]
Identify two reasons that explain why rich households spend more than the average household.
(b)[4]
Explain what a production point inside a PPC signifies and what a production point on its PPC signifies.
(c)[6]
Analyse why a person who has been unemployed for more than a year may struggle to obtain another job.
(d)[8]
Discuss whether a government ought to encourage firms to merge or not.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Higher income levels” …