Privitisation

Question 1

What is a natural monopoly?

Answer 1

The situation that occurs when one firm in an industry can serve the entire market at a lower cost than would be possible if the industry was composed by many small firms

Question 2

What is privitsation?

Answer 2

The transfer of public sector resources to the private sector

Question 3

How does privatisation take place?

Answer 3

-Sale of nationalised industries
-Contracting out
-The sale of land and property

Question 4

Why does privatisation take place?

Answer 4

-To generate income for the government
-Public sector organisations were inefficient
-To reduce political interference

Question 5

What are the effects of privatisation on consumers?

Answer 5

-Once firms are privatized, they will try to compete more efficiently with their competitors. Therefore they will try to charge a more reasonable price and quality.

Question 6

What are the effects of privatisation on workers?

Answer 6

-Often, people get unemployed after privatisation as their job gets redundant

Question 7

What are the effects of privatization on businesses?

Answer 7

They face more competition, which leads to more focus on profit, more investments into the company and also more mergers and takeovers

Question 8

What are the effects of privatization on businesses?

Answer 8

-They gain increased revenue if a sale takes place
-But advertising the sale also historically costs a lot