Which of the following is a characteristic of private enterprises?

Step 1: Analyze the question The question asks for a characteristic of private enterprises, meaning businesses owned by individuals or groups of individuals, not by the government.

Step 2: Key concept Private enterprises are set up and owned by private individuals (sole proprietors, partners, or shareholders). Their main features are:

• Private ownership of capital and resources
• Owners bear the business risks
• Owners control and manage the business
• The main motive is profit maximization

(In contrast, public enterprises are owned by government and often aim to provide services rather than to make profit.)

Step 3: Evaluate each option

• A. Business risks are borne by the buyers. Wrong. The owners or entrepreneurs bear the risks, not the customers.
• B. Capital is provided by the public. Wrong. Private enterprises get capital from owners, partners, shareholders, or loans. "Provided by the public" describes public-sector funding (taxes) or, to a limited degree, a public company's share offer.
• C. Control and management is in the hands of the customer. Wrong. Owners or their appointed managers run the business.
• D. The business is owned and run by government. Wrong. This describes a public enterprise.
• E. The main aim of setting up the business is to maximize profit. Correct. This is the defining motive of private enterprise.

Step 4: Answer The correct option is E.

Exam tip: Remember "Private = Profit" and "Public = Provide service." When a question asks about private enterprise, look for words like profit, owners, individual ownership. When it's about public enterprise, look for government, service, public welfare.