Identify and explain two differences between: MF and unincorporated businesses:

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2019). The mark or mark type is shown in brackets.

1. Award one mark for each difference (2 max) plus one additional mark for explaining why it is a difference in context.
2. Answers are likely to include:
3. MF has limited liability
4. There is continuity with MF
5. MF has a separate legal identity
6. MF is able to sell shares
7. Note: Do not accept MF is an incorporated business
8. Indicative response:
9. MF has limited liability whereas an unincorporated business has unlimited liability (1). This protects the shareholders of MF (1).
10. Context is from recognising that MF is an incorporated business – shareholders; MF is a public limited company; MF is not a sole trader or partnership; MF competitors are partnership businesses
11. Award one mark for each difference (2 max) plus one additional mark for explaining why it is a difference in context.
12. Answers are likely to include:
13. MF is not owned by the government
14. Different objectives such as private sector aim to make profits whereas public sector aim to provide a service to the public/different pricing strategies
15. Investment from the shareholders whereas public sector investment by the government
16. Note: Do not accept MF is an incorporated business
17. Indicative response:
18. MF has profit and increased market share as objectives whereas public sector organisations will have different objectives such as public provision of a service (1)
19. Context is from recognising that MF is a private sector business – MF objective is to increase profit; MF objective is to increase market share; MF is in the private sector; MF may fund investment by selling shares
20. Relevant points might include:
21. External costs
22. Waste thrown into the landfill causes pollution for local people - farmers lose some of their land - reduces locally produced food – increased spending on buying food
23. High cost to the government to clean up the waste – raise taxes or reduce spending elsewhere
24. Environmental damage when rainforest is cut down
25. External benefits
26. Healthier population – employees have less time off work – more efficient – increased output in the economy
27. Government spending on health provision falls – can spend money elsewhere
28. Recruitment of new workers will reduce unemployment in the local area
29. Knowledge/Analysis/Evaluation – award up to 10 marks using the levels-based mark scheme below.
30. Level 3: At least 2 x Level 2 + 9-10 marks for well justified recommendation as to whether or not the government should encourage the production of this new product. 7-8 marks for some limited judgement shown in recommendation as to whether or not the government should encourage the production of this new product.
31. Level 2: 4-6 marks Detailed discussion of external costs and/or benefits.
32. Level 1: 1-3 marks Outline of external costs and/or benefits.
33. Level 1 - 1 mark for each L1 statement (max of 3 marks), e.g. waste thrown into the landfill causes pollution.
34. Level 2 - 1 x L2 explanation can gain 4 marks and a further mark can be awarded for each additional L2 explanation (max 6 marks), e.g. waste thrown into the landfill causes pollution and the farmers will lose their land meaning less food will be produced locally. Local people will have to pay more for food and this will leave them with less income to spend on other goods and services, therefore lowering their standard of living (L2).
35. Level 3 - For L3 to be awarded there needs to be at least two L2 marks awarded and then a recommendation as to whether or not the government should encourage the production of this new product.
36. Award up to 2 additional marks for relevant application.
37. Possible application marks:
38. Sugar free ice-cream; waste produced causes pollution if thrown into the local landfill; farmers may lose their land; sugary foods cause health problems; increasing trends of people being overweight in country x; increased government costs to treat overweight people.
39. There may be other examples in context that have not been included here.