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  3. Public-sector (government-owned) companies are often unprofitable and a drain on

Public-sector (government-owned) companies are often unprofitable and a drain on

游客2024-01-12  28
问题 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?
选项 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.
答案 C
解析 Evaluation of a Plan
Situation A policy position is advocated, i.e., that unprofitable public-sector companies that burden taxpayers should be sold to the private sector. As private-sector companies, they would either become efficient and profitable or go out of business.
Reasoning In what way is the policy position flawed? The rationale given for the policy is that unprofitable public-sector companies burden taxpayers and privatizing them would subject them to competition—which would force them either to become efficient and profitable or to go out of business. But one of the characteristics of some public-sector companies is that they must provide certain services in market segments where provision of the services cannot become profitable. For example, provision of transportation services in sparsely populated rural areas is likely to be unprofitable because utilization of the services is insufficient to cover the cost of those services at a price that the market can bear.
A This information does not clearly indicate a flaw, since elimination of an exorbitant recurring cost by selling off, even at a very low price, an inefficient public company could be financially rational, even if not rational in other ways.
B This scenario could result in the non-provision of services that should be provided in the public interest, but it represents an aberration relative to the privatization policy described and does not indicate an essential flaw in that policy.
C Correct. This information indicates an essential flaw in the privatization policy described, since private companies are unlikely to provide services, even those needed by the public, in situations where provision of those services is unprofitable. D This information indicates that some government-controlled companies can be profitable even when those companies were not profitable when in the private sector. But this does not indicate a flaw in the reasoning concerning privatization.
E This information offers no help in identifying a flaw in the argument. The types of costs listed are only some of the costs that companies incur and may not be the most significant cost factors in determining whether a company is profitable or not. The correct answer is C.
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