Over recent years, Peru has been shifting away from a mixed economic system and moving nearer to a market economic system. One sign of this change is that more small firms have been started. For some of these firms, the short-run objective is profit maximisation, whereas others are aiming to expand. In the long run, both of these aims can be achieved. Some small firms grow into large firms that are quoted on their country’s stock exchange.
(a)[2]
Define a ‘mixed economy’ in economic terms.
(b)[4]
Explain why the growth of a firm may result in profit maximisation in the long term.
(c)[6]
Analyse how a country’s stock exchange may benefit its economy.
(d)[8]
Discuss the advantages and disadvantages that small firms have.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “An economy that includes a private sector” …