The Competitive Market System

question 94

Multiple Choice

The competitive market system

• A)encourages innovation because government provides tax breaks and subsidies to those who develop new products or new productive techniques.
• B)discourages innovation because it is difficult to acquire additional capital in the form of new machinery and equipment.
• C)discourages innovation because firms want to get all the profits possible from existing machinery and equipment.
• D)encourages innovation because successful innovators are rewarded with economic profits.

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Definitions:

Demand

The willingness and ability of consumers to purchase goods or services at different prices.

Price

The expected fiscal outlay, necessitated, or expended in compensation for an item.

Demand

The quantity of a product or service that consumers are willing and able to purchase at various prices during a certain period of time.

Demand

The quantity of a product or service that consumers are willing and able to purchase at various price levels at a given time.