Private and Public Sectors

Private Sectors
• Public Sector: Businesses owned by the government, providing collective goods and services. Funded by taxes from individuals or businesses in the private sector.
• Private Sector: Businesses established by private entrepreneurs, aiming to satisfy customer needs and generate profit.
• Competition in the private sector requires offering the best value for money.

Formal and Informal Sectors
• Formal Sector: Businesses administered according to government laws, contributing to the GDP. They have fixed locations like shopping malls or other fixed premises.
• Informal Sector: Businesses not legally required to pay tax and not included in GDP calculation. They operate from fixed premises, such as the entrepreneur's garage.

Importance of Informal Sector
• Supports the Formal Sector: Informal businesses often buy supplies from formal businesses, keeping the economy moving.
• Creates Jobs: Informal sector provides jobs for many people, especially those who can't find work in the formal sector.
• Alleviates Poverty: Earning money allows people in the informal sector to support themselves and their families, reducing poverty levels.