Question:

3 In 2020, some firms in Suriname, a South American country, stopped production. This was
because the firms could not cover their variable costs, as well as some of their fixed costs. The
reduction in the country’s output resulted in a rise in its unemployment rate. The government
used supply-side policy measures to reduce unemployment. In 2021, the number of firms in some
markets fell again, but this time it was when output was rising.
(a) Define, with an example, a fixed cost. [2]
(b) Explain two types of unemployment. [4]
(c) Analyse how supply-side policy measures could reduce unemployment. [6]
(d) Discuss whether or not having fewer firms in a market will benefit consumers. [8]

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