Public and private sectors- Economics

The private sector is made up of several businesses but owned by private individuals. There are many different types of businesses in the private sector such as:

Sole trader: A sole trader is someone who starts his own business all by himself. He may choose to employ others. Sole traders have unlimited liability. This means that he/ she has full responsibility of all the profits/ losses made by the company.

Advantages: All the profits go to you, you can make all the decisions for your business, you can even take a day off if there is too much work to do.

Disadvantages: The opportunity cost of not showing up for work one day could be not making the money you could have made. Sole traders have unlimited liability, they have limited access to capital, they ussually feel isolated as they are solely running the business.

Partnerships is when a few people (usually 2 or 3) start a business together. They tie up with others in order to achieve a similar goal. They can employ others.

Advantages: Greater access to capital goods which means that you can sell more items at a time. You also have shared responsibility, which means the money is split, whether it is a profit or loss. With more people, it is easier to set up the business.

Disadvantages: Partnerships usually have unlimited liability, all partners are liable for the debts of others. If your co-worker makes a mistake which affects your profits, both you and him/ her have to pay for the debts of the company.

Private limited company: A private limited company is owned between 1 and 50 shareholders. Shareholders are the owners of shares in a company, they have to own at least 1 share. The amount of shareholders in a company varies depending on how big the company is in terms of business.

Advantages: Shareholders have limited liability, so they are not fully responsible of all the profits/losses made by the company.

Disadvantages: Shares cannot be traded in the stock exchange as they are typically small businesses. Can only have 2-50 shareholders.

Public limited company: Usually a large and well-known business. Owned by a minimum of 2 people and no limit to the amount of shareholders.

Advantages: Since this is a large and well-known company, it…