ROLE OF FIRMS IN THE

ECONOMY
 Which of the following products and services should be made
available by the government, which by firms, and which could be
either?

 Education
 Health care
 Coffee
 Bread
 Clothes
 Jet-skis
 Bus service from Imatra to Ruokolahti
 Roads on which you can drive 20 km/h faster than on regular roads
 In different countries, the role of the government vs. the private sector may differ. Companies can step
in where government fails:
https://www.ted.com/talks/ludwick_marishane_a_bath_without_water/transcript.
TED TALKS

 In the video, we see an example of an entrepreneur - someone who starts a business of

their own. An entrepreneur is required for any company to get started, but as companies
grow, the role of the entrepreneur often gets smaller.
 There are different types of companies based on who owns them and is financially
responsible for them. Find out about the following types of firms (this site gives you basic
info):
 Who provides the money How are decisions made? How does financial
when the company starts responsibility work if the
up or expands? company does poorly?
Proprietorship
(Wheelworks
www.wheelworks.co.nz)
Partnership
(Gemic) www.gemic.com
Limited partneship
(Tilitek, Menorengas)
Limited company
(Kone)
www.kone.com/en/
Cooperative
association (S-
ryhmä) https://www.s-
kanava.fi/web/s/en/s-
ryhma-lyhyesti
 Who provides the money How are decisions made? How does financial
when the company starts responsibility work if the
up or expands? company does poorly?
Proprietorship The owner The owner makes all the The owner
(Wheelworks decisions
www.wheelworks.co.nz)
Partnership The partners The partners make all the All partners
(Gemic) www.gemic.com decisions together
Limited partneship The partners and at least Only the partners make the All with the amount of money
(Tilitek, Menorengas) one investor decisions together, not the they have invested
investors
Limited company Investors and shareholders Shareholders and the selected Shareholders will lose their
(Kone) government of the company investments
www.kone.com/en/
Cooperative Members of the Selected delegates of the Members will lose bonuses
association (S- cooperative cooperative members
ryhmä) https://www.s-
kanava.fi/web/s/en/s-
ryhma-lyhyesti
Homework

 Choose the type of company you find most interesting, and familiarize yourself with one
example of such a company.
 Answer the following questions:
 One reason why you think they operate the company form they do:
 One thing that is good about this company:
 One thing that might be negative about this company’s operations:
 What would you like to ask about their business if you had a chat with the leader of this
company?
 Which company in Imatra would you like to visit in the coming week and why?
Firms that Imatra students will visit

 Aino & Roman: Konditoria Imatrankoski

 Mette & Artem: A-kilta
 Aleksei & Nina: Aino-koti
 Anette & Anastasia: To be lova
 Kevin & Karina: Tainionkosken apteekki
Questions:

 Why did they set up the business / apply for the job they now have?
 When did they set the business/firm up?
 What are their main goods/services?
 What kind of investments they have needed to make? Machinery etc.
 Why did they choose the location for their business?
 How many employees you have?
 Who are your main customers/consumers?
 What challenges does the company face and how does it deal with them?
 What opportunities does the company have?
 What has the company achieved during the time it has been in existence / they have worked there?
 What does the company add to the quality of life of the people of Imatra and others?
 What are the company’s environmental impacts?
Key terms

 Supply = the quantity firms are willing and able to sell at

certain price
 Law of supply
 Excess supply = too much of a good on the market →
prices will be forced downwards
 Excess demand = too much demand for a good → prices
will be forced upwards
Law of supply

 When the price rises, the quantity supplied

increases and vice versa
 Aslong as other variables (the cost, availability
and quality of factors of production) remain
unchanged, then a rise in the price of a good will
lead to an increase in the quantity supplied
 P
 Higher prices can add to S
firms’ revenue and
additional profit
P1
→ suppliers will have an
incentive to put more of the
P0
good on the market

Q0 Q1 Q/t
Excess supply and excess demand S
P

Q/t