Utopia’s government wants to invest heavily in a diamond processing plant which would be run by the public sector. Diamond processing plants involve very large fixed costs. A local politician argues that using several smaller plants would be better as there would be competition between them. The politician also prefers private ownership to public ownership. Is the politician correct?

Answer rating: 100% (QA)

Ans1 The politician is partially correct He is correct in saying that setting up of several small plants would be better but he is not correct in pref... View the full answer