Separate private-sector and public-sector activity
Distinguish ownership and control by private owners from activity owned or controlled by the state.
Section 1 · Understanding business activity
Exam scope and assessment notes
Cambridge IGCSE Business Studies 0450, 2026 syllabus, Version 2. Use the 2026 A*–G route; this qualification changes to 0264 for first assessment in 2027. Candidates are not assessed on constructing income statements or statements of financial position, nor on price-elasticity or exchange-rate calculations. Simple cash-flow forecast construction is assessed. Written practice is self-checked, not an official Cambridge grade; timed-paper evidence and human subject-teacher review remain outstanding.
Before you begin
- No previous business study is assumed. Read each scenario for the decision-maker, objective, available evidence and constraints.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
What determines whether an organisation is public-sector or private-sector?
What you will learn
- Distinguish public and private sectors
- Classify examples by ownership
- Separate economic sector from ownership sector
Classify who owns or controls it
The private sector consists of businesses owned or controlled by private individuals or organisations. They may include sole traders, partnerships and companies.
The public sector consists of organisations owned or controlled by government, often providing public services. A public limited company is still in the private sector: 'public' in its legal name means shares can be offered to the public, not that government owns it.
Use two independent classifications
Primary, secondary and tertiary describe the type of economic activity. Public and private describe ownership or control. These are different axes.
For example, a state-owned bus service is tertiary and public-sector; a privately owned farm is primary and private-sector.
Pause and explain
A public limited company is owned by private shareholders. Which sector is it in?
Worked example
A government owns a hospital, while private investors own a bus operator. Identify each organisation's sector by activity and ownership.
Show the worked solution
- Both mainly provide services, so identify the economic sector.
- Then identify whether government or private owners control each.
- Keep the classifications separate.
Answer Both are tertiary. The hospital is public-sector; the bus operator is private-sector.
Try a topic test
Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
Classify a state-owned water utility and a private farm by both economic activity and ownership sector.
Give me a hint
Name the activity first and ownership second.
Compare my reasoning
- The utility mainly provides a service.
- The farm obtains natural products.
- Government owns one; private owners control the other.
Water utility: tertiary and public-sector. Farm: primary and private-sector.
Look for these in your work
- Activities classified
- Ownership classified
- Axes kept separate
A government sells a state-owned factory to private investors. Which classification changes, and which may stay the same?
Give me a hint
Separate ownership from the type of production.
Compare my reasoning
- Ownership changes from public to private.
- The factory still manufactures goods.
- Manufacturing remains secondary activity.
Its ownership sector changes from public to private, while its economic activity can remain in the secondary sector.
Look for these in your work
- Ownership change stated
- Activity preserved
- Sectors distinguished
A learner says a public limited company must be state-owned because it contains the word public. Correct the error with a contrasting example.
Give me a hint
Explain the legal-form meaning of 'public limited'.
Compare my reasoning
- Its shares may be offered to public investors.
- It can still be owned by private shareholders.
- Contrast it with an organisation owned by government.
A public limited company can be privately owned; 'public' describes share access. A government-owned hospital, by contrast, is in the public sector.
Look for these in your work
- Legal term explained
- Private ownership noted
- State-owned contrast supplied
Common mistakes
- Assuming every public limited company belongs to the public sector
- Confusing service activity with state ownership
- Assuming all public-sector organisations have profit as their only objective
What can you explain now?
What determines whether an organisation is public-sector or private-sector?
Compare with the explanation
Who owns or controls it
Ownership/control distinguishes the sectors.
After trying it yourself, choose your next review. This is your self-assessment.
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Make it stick
Give examples showing why economic sector and ownership sector are separate classifications.
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.