1. PUBLIC SECTOR

2. PUBLIC SECTOR V PRIVATE SECTOR Public sector: Public sector: everything that is... owned by the g____ for the benefit of all c____. Private sector: everything that is... owned by private i____ for the benefit of the o____.

3. Discuss the size of public sector in the three types of economies.

4. 2. a) PUBLIC GOOD: Goods and services provided by the state that can be consumed by everybody in a society. They are 1. Non-rival: (to rival = to compete) 2. Non-excludable: (to exclude somebody = to leave somebody out) one person consuming them doesn’t decrease the amount available to others. if one person can consume them, it is impossible to stop another person from consuming them.

5. Why does the state have to provide public goods? Non-rival + non-excludable Hard to get people to pay to consume them. Private sector cannot make profit on them. Unprovided by private sector.

6. ARE THE FOLLOWING PUBLIC OR PRIVATE GOODS? EXPLAIN BY USING THE CONCEPTS: NON-RIVAL & NON- EXCLUDABLE ! Street lights Fireworks Electricity National defence Public roads A hamburger

7. HOW ARE PUBLIC GOODS PAID FOR? Taxes (most often) Own profit/surplus (sometimes) Philantropy: donations (rarely)

8. Types of Businesses

10. Which type of business organization? Owners’ unlimited liability for debt Business is not a legal entity Owner manages the business Owners’ limited liability for debt Shareholders are not always managers Business is a legal entity Independent professions Crafts Limited liability companies Joint stock companies

11. Limited liability company OR joint stock company? Shareholders cannot sell shares to the general public Limited liability Management board, assembly, (supervisory board) Higher amount of minimum share capital General assembly, management board, supervisory board (or board of directors) Disclose accounts publicly Flotation (optional) Limited liability companies Joint stock companies

12. P. 32/VI Find definitions for these terms Board of directors Joint stock company Craft Limited liability company Management board Share Unlimited liability Limited liability Dividend Supervisory board Flotation General assembly