CHAPTER 12 - Privatisation IGCSE Economics

CHAPTER 12 PRIVATISATION

Revision

Multiple Choice

Privatisation means moving something from public sector into the ............. sector.

• private

• tertiary

• secondary

• primary

Three Types of Privatisation

1. Sale of Nationalised Industries

2. Contracting Out

3. The Sale of Land and Property

Sale of Nationalised Industries

• Nationalised is opposite of privatisation. It is the movement of a company from the private sector to the public sector

• Many privatised companies were natural monopolies

Contracting Out

• Private companies provide services previously done by government employees

• Sign contracts with the government to provide the services

• Also called OUTSOURCING

Sale of Land and Property

• Real estate owned by the government is sold to private investors

Multiple Select

Why do governments privatise?

• To generate income

• Private sector is more efficient (profit maximisation)

• To reduce political interference (corruption)

• To maximise costs

REVIEW THIS SLIDE BEFORE ANSWERING THE NEXT QUESTIONS

Open Ended

Write two advantages of privatisation for consumers

Open Ended

Write two disadvantages of privatisation for businesses

Multiple Choice

One disadvantage of privatisation for governments is that the government may sell the assets too cheaply.

• True

• False

Multiple Choice

Missing Markets: A privatised firm will not operate loss-making services even if they are socially desirable. This will mean less merit (public education and hospitals) and public goods (street lights), which is a market failure.

• True

• False

Multiple Choice

Owners will be interested in:

• Wanting good bonuses and promotion

• Wanting good pay and job security

• Wanting the business to grow and make profits