Which of the Following Is a Key Criticism of the Market

question 75

Multiple Choice

Which of the following is a key criticism of the market economy as a system of allocation?

• A) Goods and services are allocated unequally based on ability to pay.
• B) Producers have strong incentives to innovate because successful innovators are rewarded with higher profit.
• C) Consumers can transmit their preference for product quality and variety by way of their "dollar votes" cast in the marketplace. Since price is freely set based on supply and demand, there are few shortages or surpluses.
• D) None of the above.

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Definitions:

Money Incomes

The total amount of money earnings received by an individual or group before any deductions.

Marginal Product

The additional output that is produced by adding one more unit of a specific input, keeping all other inputs constant.

Firm's Total Output

The total amount of goods or services produced by a company during a specific period.

Derived Demand

The demand for a factor of production or intermediate good that arises from the demand for the final good or service it helps to produce.