(a) What is E-Commerce (b) State four advantages and four disadvantages of privatization

Answer Details

(a) What is E-Commerce?

E-commerce (electronic commerce) is the buying and selling of goods and services, and the transfer of money and data, carried out electronically over the internet and other computer networks. It allows businesses and consumers to trade online through websites, mobile apps and electronic payment systems without meeting physically (for example, online shopping and internet banking).

(b) Four advantages of privatization

1. Improved efficiency. Privately-owned firms are run for profit, so they tend to be managed more efficiently than loss-making government enterprises.
2. Reduced burden on government. Selling off enterprises relieves the government of the cost of financing and subsidising them, freeing funds for other projects.
3. Revenue for government. The sale of public enterprises brings in money that boosts government revenue.
4. Encourages competition and investment. Private ownership promotes competition, wider share ownership and inflow of capital, leading to better goods and services.

Four disadvantages of privatization

1. Higher prices. Private owners seeking profit may raise prices of essential goods and services, hurting the poor.
2. Job losses. New private owners often retrench workers to cut costs, increasing unemployment.
3. Concentration of wealth. Enterprises may be bought by a few wealthy individuals, widening inequality.
4. Neglect of unprofitable but essential services. Private firms may abandon services that are socially useful but not profitable, especially in rural areas.