Lesson 12-Privatization

Question 1

Define Privatization

Answer 1

The sale of state owned assets to the private sector.

Question 2

Reasons for Privatization (2)

Answer 2

1. To generate an income- from the proceeds of privatization and the resulting corporation taxes when these firms make a profit. Also the government no longer has to spend on providing the service.
2. To reduce inefficiencies- The govt sector is known for its inefficiencies and poor quality service due to the lack of profit motive. Once privatized in an attempt to make profit, the service provided will be better.

Question 3

Effects of privatization on consumers (2)

Answer 3

Better quality goods and services
Lower prices dur to competition

Question 4

Effect of privatization on workers

Answer 4

Loss of jobs as business will want to cut costs