Answer to Question #239508 in Macroeconomics for Jongikhaya

Question

Why is a public sector necessary at all in a so-called free enterprise economy?

Answer 1

Public sector is important to control illegal aspects that may be practiced in an economy. Free Enterprise economy may encourage business people to engage into businesses that adversely affect the wellbeing of the citizens. Similarly, public sector may help in price control, as free Enterprise economy may make firms to come up with prices exploiting its customers.