Private Sector

Private Sector

Private Sector, that part of an economic system which is independent of Government control. Broadly, the private sector coincides with the productive activities operated by private enterprise. They include a wide range of organizations from the one-man firm to the giant corporation, all controlled and managed by private individuals guided by their desire to maintain or increase earnings and profits by selling the goods and services the public demand.

Production, any activity which serves to satisfy human wants. In its widest sense production includes the efforts of all the service and professional occupations actors and accountants, ballet-dancers and butchers, dentists and dustmen, and so on. On the manufacturing side it embraces not only the process of manufacture but also the work of people engaged in moving goods from factories and farms where they are useless, to the households of the consumers where they are useful the activities of transport, warehousing, wholesaling and shopkeeping.

The general standard of living of a community rests essentially on the quantity of goods and services available per head of the population, and this in turn depends on the volume of production. Redistributing income from rich to poor will have little effect if the rich are in a small minority. It is only by raising production that substantial improvements can be made.

The volume of production depends mainly on the quality and quantity of raw materials, labour and equipment; the extent of technical knowledge; the quality of political and business organization. Significant changes in the level of production can be achieved only by altering one or more of these elements. If a community refrains from using all of its output for current consumption it can raise future production by using its resources to improve the land and to increase the quality and quantity of its equipment, technical knowledge and labour force.

Every producer faces two basic problems: what combination of resources to use in order to produce efficiently, and how much of a commodity to produce. Failure to solve these problems will result in wasteful production techniques, as well as unwanted surpluses of some goods and shortages of others.

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Since then his writings have in turn been increasingly reinterpreted as a special case both by some followers and by some economists who had not wholly accepted his writings. The content of economics is in a state of change, and this site is therefore not a final statement of economic doctrine.

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