business structure

• What is the public sector made up of?

  Organisations that are owned and run by the government
• How much does the government spend annually on public sector organisations?

  Over £450 billion a year
• What is the largest public sector organisation in the UK?

  The NHS
• Why are some goods and services not provided by the private sector?

  Because they are necessities that do not generate profit
• What are public goods?

  Goods which will only be provided by the government
• What are the two features of public goods?

  • Non-excludability
  • Non-rivalry
• What does non-excludability mean in the context of public goods?

  Individuals cannot be prevented from enjoying the benefits of public goods
• What does non-rivalry mean in the context of public goods?

  One person's consumption does not prevent others from consuming the same good
• What are merit goods?


  Goods and services supplied by both the private and public sectors
• Why does the government provide merit goods for free at the point of delivery?

  To counteract underconsumption and ensure access for all
• What are positive externalities in the context of merit goods?


  Benefits that extend beyond the individual consumer to society as a whole
• How does education serve as a merit good?

  It leads to better-educated individuals who can contribute positively to society
• What is the core role of the public sector?

  To create a fair and just society and an efficient economy
• What is the private sector comprised of?

  Businesses owned by shareholders or private individuals
• What is the primary objective of private businesses?

  To make a return on the capital invested
• What is profit maximisation?


  A key expression for measuring business success
• What is the importance of ethical objectives for businesses?

  They can increase costs and reduce profits
• How is shareholder value measured?

  By the dividend paid and the share price
• Why is survival a key objective for new businesses?

  Most new businesses fail within the first two years
• What is market share?

  The percentage of an industry or market's total sales that is earned by a particular company
• What are the advantages of sole traders?

  • Easy to set up
  • Low costs and administrative burden
  • Fast decision-making
• What are the disadvantages of sole traders?

  • Limited capital
  • Limited range of skills
  • Unlimited liability
• What does unlimited liability mean for a sole trader?


  The owner is liable for all debts of the business
• What happens if a sole trader goes into debt?

  They may lose personal assets to pay off business debts
• What are the characteristics of partnerships?

  • Joint ownership of a business
  • Typically 2 to 20 partners
  • Governed by a Partnership Agreement
• What is the role of a Partnership Agreement?

  It lays out the rules of operation for the partnership
• What does 'jointly and severally' liable mean in a partnership?

  Each partner is equally responsible for any debts of the partnership
• What are the advantages of partnerships over sole traders?

  • Wider range of skills
  • Greater availability of capital
  • Shared decision-making
• What is a disadvantage of partnerships?

  Capital can still be limited
• What is a sleeping partner?


  A partner who invests but does not take part in day-to-day operations
• What governs the settlement of disputes in a partnership without an agreement?

  The 1890 Partnership Act
• What does the 1890 Partnership Act state about partner liability?

  Each partner is 'jointly and severally' liable for any debts.
• What are some advantages of the partnership structure over a sole trader?

  A wider range of skills, greater availability of capital, and shared decision-making.
• What is a disadvantage of becoming a partner compared to being a sole trader?

  Capital can still be limited, similar to a sole trader.
• What happens to a partnership upon the death of a partner?

  The partnership is dissolved.
• What are some potential strains caused by new partners in a business?

  New partners can cause strains within a business despite advantages like increased capital.
• What are the two types of business structures that have limited liability?

  Private limited companies (Ltd) and public limited companies (PLC).
• What is meant by the term 'incorporation' in the context of limited companies?

  Incorporation means the business exists separately from its owners in the eyes of the law.
• What is the liability of shareholders in a limited company?

  Shareholders are only liable to lose the amount of money they have invested in the business.
• What is a major difference between private limited companies and public limited companies?

  Public limited companies trade their shares on the stock market.