If a country is operating within its production possibility curve, how would privatisation affect it?

Question

Need help with this question. Apperently it is a past paper question and it came from a book I am not currently using. Any kinf of help will be useful.

Answer 1

Privatitization helps a country to move away from the production combination point within the production possibility curve towards the effeicient point on the production possibility curve and even help cause an upward shift in the production possibility curve. Thus more output results from the same quantity of resources that were  being utilized before privatization.

Privatization helps improve efficiency with which resources are actually utilized. Public sector companies seldom operate at technically efficient points because of wastage of materials and energy, under-utilisation of labor and capital - thanks to the lack of effective management incentives and non-performance penalties and bureaucratic procedures and non-professional board of directors.

So, when privatization takes place, private owners do not tolerate such wastages and under-utilization. They introduce various incentives schemes and non-performers face penalties and even lose jobs. Board of Directors have professional people who knows how to control and monitor management's performance. There is no leakage of materials and money to please bureaucrats and politicians/ ministers. Thus with the same level of resources, the privatization enables a firm to move closer to and reach the point on the production possibility curve or the efficiency frontier.  

Answer 2

That's a very broad question, and there must be some underlying assumptions that are missing here.

Operating within the PPC means the nation is not producing at full employment - nor at full output.

That you ask about privatization begs the question that there is at least some publicly owned production. If one feels that privatization improves efficiency, then we should move closer to the PPC.  

Answer 3

Affect what? The PPC? In reality, countries are always producing within its PPC. So.... if there is privatisation happening in the country. What? You need to consider the rationing systems.. free market v.s planned economy. I have no idea what the question is asking me .. sorry

This should the best answer by the way. The question is weird.