Which of the Following Is an Advantage of a Free-

question 72

Multiple Choice

Which of the following is an advantage of a free- market economy?

• A) The economy can respond quickly to changes in demand.
• B) The distribution of income may be very unequal.
• C) There may be little competition between firms.
• D) A small number of large firms may control some industries.

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Definitions:

Absolute Advantage

The ability of a country, individual, company, or region to produce a good or service at a lower cost per unit than competitors using the same amount of resources.

Comparative Advantage

An economic theory that suggests a country should produce and export goods in which it has a lower opportunity cost than other countries.

Temporary Advantage

An advantage or benefit that an organization holds for a short period of time, often due to a unique product, service, or situation.