PRIVATE SECTOR: A short-cut term that combines the households and businesses in the economy into a single group. This term should be contrasted directly with public sector, which is a comparable short-cut term for government. The distinction between private sector and public sector reflects the two basic methods of answering the three questions of allocation--markets and government. Markets make use of private ownership and control of resources (hence the term "private" sector) for voluntary allocation decisions. See also | household sector | business sector | public sector | government sector | three questions of allocation | ownership and control | liberal | conservative | government functions | market failure | fifth rule of imperfection | public choice | normative economics |
