Gangadhar111990 wrote:
Quote:
Public-sector (government-owned) companies are often unprofitable and a drain on the taxpayer. Such enterprises should be sold to the private sector, where competition will force them either to be efficient and profitable or else to close.
Which of the following, if true, identifies a flaw in the policy proposed above?
(A) The revenue gained from the sale of public-sector companies is likely to be negligible compared to the cost of maintaining them.
(B) By buying a public-sector company and then closing the company and selling its assets, a buyer can often make a profit.
(C) The services provided by many public-sector companies must be made available to citizens, even when a price that covers costs cannot be charged.
(D) Some unprofitable private-sector companies have become profitable after being taken over by the government to prevent their closing.
(E) The costs of environmental protection, contributions to social programs, and job-safety measures are the same in the public and private sectors.
Kindly explain the reasoning for selecting answer choice C and eliminating A & B.
What logic I am able to apply is the "flaw in the policy" means why public sector co. should not be sold to private sector and as per this I am only able to select A & B and not C.
But it seems my flaw is wrong that is why I am facing trouble but then again I am not able to understand what this flaw is actually suggesting in the question.
Kindly share your knowledge on the same.
KarishmaBI am no expert but let me know if my explanation helps you.
Conclusion: Govt. should sell such enterprises to the private sector, where competition will force them either (1) to be efficient and profitable or (2) to close.
(A) The revenue gained from the sale of public-sector companies is likely to be negligible compared to the cost of maintaining them.
This strengthens the argument.
If the cost of maintaining these enterprises is high compared to the revenue that is to be gained from a
one-time sale, it's better to eliminate that cost as early as possible, especially since the value of the company in the market is likely to be negligible compared to the
recurring maintenance costs.
If the profitability angle is a bit hard to understand, think of it this way: if the govt. is incurring losses every month because it has to maintain this loss-making company, once it sells the company, it will stop incurring those losses. Can those losses be reduced in the future? Maybe. But that isn't in the scope of the arg.
(B) By buying a public-sector company and then closing the company and selling its assets, a buyer can often make a profit.
This strengthens the argument.
It doesn't matter whether the buyer (non-govt. entity) makes a profit or loss. The buyer has to either make it efficient and profitable or close as per the conclusion. This option makes the conclusion more likely to be true.
(C) The services provided by many public-sector companies must be made available to citizens, even when a price that covers costs cannot be charged.
This is a flaw in the argument.
This option conveys that the services provided by those public sector companies are essential. If that public sector company is closed, these essential services will not be available to the general public. Hence, the govt. can't sell these companies otherwise they will have to find a new way to support those essential services (even if they are to be provided for free using taxpayers' money)
Let's say that the public enterprise is supposed to maintain a public water dispensary service or a urinal in a public place (let's say near a bus stand). They have the option to charge a fee or they may not (the money will come from taxpayers' pockets). But, if they sell it off to a private entity, the private entity might close it down and the citizens will be affected, leading to the creation of a new public enterprise to provide the same essential service to the general public.
I hope this helps.
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27 Sep 2021, 21:34
