Question

Widespread corporate privatization in developing and formerly socialist countries:

Multiple Choice

• All of the above.

• increases the opportunity set facing these countries' citizens.

• depends on private investment.

• will eventually enhance the standard of living of these countries' citizens.

• will improve production efficiency and resource allocation.

Answer 1

Answer: All of the above.

The widespread corporate privatization in developing and formerly socialist countries depends on private investment. The widespread corporate privatization increases competition in the private sector, and thus improves production efficiency, optimum utilization of resources and resource allocation. The production efficiency comes with factor specialization. The factor specialization increases the marginal productivity of factor that will eventually increase the factor price. So, with the widespread corporate privatization, the labor productivity and specialization rises, that increases the wage rate and thus standard of living. The privatization also increases different types of opportunities including education and job opportunities in the country. Thus over the time, the employment level also rises.

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