what is the private sector?
includes all these businesses that are set up by individuals / groups
e.g sole traders, partnerships, charities and cooperatives.
what is the public sector?
business activity that is owned / run by the government for the benefit of everyone
e.g. army, police force, schools, hospitals
what are public goods?
goods that would not be provided in a free market system, because firms would not be able to charge for them
what are non-excludable goods?
it is impossible to exclude others from benefiting from their use
e.g people who use the street will benefit from the street lighting provided.
what are non-rivalry goods?
the consumption of the good by one individual does not reduce the amount available for others
e.g. social services.
what are merit goods?
goods that could be provided by the free market but it is recognised that they would be under-consumed
what are consumer goods?
goods that are used by the consumer
what are producer goods?
items that are bought by another business and used to help make other goods
e.g. JCB
what are single use goods?
items that can only be used once
e.g. ice cream, coffee
what are durable goods?
Items that can be used over and over again
e.g. car, kettle
what is the definition of services?
intangible tasks performed in return for payment (includes personal/
direct services)
e.g. hairdresser
what is the importance of the public sector?
- we all benefit from them without paying for them
- private companies wouldn’t provide these goods/services unless they were making a profit
what are the aims of a business?
the long-term intentions that provide a focus for setting objectives
what are the objectives of a business?
the medium to long-term targets that can give a sense of direction to a manager, department or whole organisation
e.g. boost market share from 8% to 10% within the next 3 years
what are the aims of the private sector?
- survival
- maximising profit
- growth
- gain market share
- improve reputation
what are the aims of the public sector?
- provide a universal service to all UK households
- provide a service that the private sector may not be willing to provide (not profitable to do so)
- raise society’s standard of living
- provide effective public goods.
what is the definition of a sole trader?
a business owned and run my one person
what is the definition of a partnership?
a joint owned business, with 2-20 owners
what are the advantages of a sole trader?
- easy to set up
- low costs
- no need to publish the accounts
- fast decisions (full control)
what are the advantages of a partnership?
- wider range of skills
- greater capital
- shared decision making
- reduced pressure
what are the disadvantages of a sole trader?
- limited capital
- limited range of skills
- unlimited liability (personally responsible for all business debts)
what are the disadvantages of a partnership?
- unlimited liability
- complications with re-establishing the partnership after the death of a partner
- capital is still limited
- new partners can cause strains
what is the definition of a private limited company (LTD)?
a small business where shares are traded with family/friends
what are the advantages of an LTD?
- limited liability (not personally responsible for business debts) - legal action is taken against the business and not the owners
- control is not lost
- capital can be easily raised by getting more shareholders
