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private sector
businesses owned by individuals or shareholders
public sector
the part of the economy controlled by the government
privatisation
the transfer of a business, industry, or service from public to private ownership and control
market economic system
an economic system where two forces, known as supply and demand, direct the production of goods and services (role of government is to oversee and enforcing the principles of demand and supply)
advantages of market economic system
responsive to changes in consumer demand
competition promotes efficiency and low prices
quality is high and innovation is encouraged
disadvantages of market economic system
market failure occurs when market forces don’t work well
differences in income and wealth are likely to widen over time
environmental damage may result due to lack of government restrictions
market failure
market forces resulting in an inefficient allocation of resources
