Questions:

1) Define the term public sector.

The simplest explanation for a public sector is that it is the part of an economy that is controlled by
the state. This includes everything from schools and hospitals to roads and bridges. The main reason
why public sector exist is to provide essential services and things that are important for the well-
being of the society.

2) Explain one potential effect for consumers of a large public sector.

Consumers will have less burden financially as the public sector is large and richer. The public sector
provides services at a lower cost compared to the private sector. This also comes with a higher
percentage of tax that needs to be issued to maintain the public sector alive. The public sector will
come with its pros and cons but overall, it is better for the consumers as the services provided are
cheaper and more affordable from them such as transportation and hospitals. Although public
sector can be unreliable, it is still a lot better than a service at which is too expensive for the
consumers to afford. Thus, consumers are able to have a lower cost of living which leads to a higher
economy overall.

3) Evaluate the possible impact for businesses in Cuba of having a freer market economy.

The impact that this has towards the businesses in Cuba is that the businesses in Cuba would
increase in efficiency. This is because with a larger and freer market, the businesses would have to
compete which in turn will help the market grow and it also needs to be innovated to become more
efficient with their services. Other than that, this also helps the business to think of more innovative
ideas as to be different than the other businesses. This leads to increased need of high intellectual
people with a higher salary. Thus, this also provides more jobs that are higher in salary which
inevitably makes the economy better. This also leads to more technological advancements in Cuba
which will make production of a higher quality and quantity possible. With a higher production, they
are able to meet the increasing demands of the consumers in Cuba. The limited resources in Cuba
forces businesses to be more efficient in the usage of resources. A freer market economy also leads
more types of businesses all around the world to be introduced into the Cuba market.
EXAM PRACTICE 1.2.1

1) Define the term private sector.

Private sector can be simplified as the part of the national economy that is not under direct state
control. They are typically own by private groups or an individual that has no connections with the
government. They are most likely operating on a for-profit basis.

2) Explain one advantage and one disadvantage for consumers of businesses being in the private
sector.

One advantage for consumers of businesses being in the private sector is that the services provided
are much faster and more reliable as they only hire highly talented and educated individual as their
employee as they have a lot more capital to invest. After that, one disadvantage for consumers is
that the cost of the services are much higher than those in public sectors. This leads to majority of
the consumers not being able to afford to go to private sectors and they are non a good option for
them.

3) Explain one advantage and one disadvantage for consumers of businesses being in the public
sector.

One advantage for the consumers of business being in the public sector is that the services they
provide services at a much cheaper cost. This allows most of the consumers to be able to get the
services at a much lower price compared to the private sector as they are backed by the
government, and they are to provide the citizens with essential medication. After that one is
advantage for consumers of businesses being in the public sector is the services tend to take a
longer time than expected because they are providing services to a larger number of consumers as
most of the citizens uses the public sector as they cannot afford to go to the private sector.

4) Discuss the reasons why a government may move businesses out of the public sector and into
the private sector.

One of the reasons why a government may move businesses out of the public sector and into the
private sector is that the private sector tends to have a more efficient service. It also reduces the
burden of the nation by moving a public sector company to become a private sector. It also reduces
the burden in terms of underutilization of resources, over and redundant employment, financial
crisis and many more. This allows state officials to spend less time managing and maintaining
equipment thus allowing more time to be allocated to the essential services to be efficiently
delivered. Private sectors will also facilitate a healthy competition between other private businesses,
and this can also lead to enhance productivity of employees. besides that, it also has little to no
political influence which leads to a more stable company or business.