Which of the Following Statements Is True About Risk Management

question 246

Multiple Choice

Which of the following statements is true about risk management in market systems versus command systems?

• A) Market systems manage risk better because entrepreneurs taking risks bear the costs of poor decisions, whereas in command systems government decision makers don't bear those costs.
• B) Neither system is better than the other in terms of risk management; both systems are equally susceptible to natural disasters and changes in consumer preferences.
• C) Command systems manage risk better because the government controls most economic activity and can therefore eliminate risk.
• D) Market systems face risk because of the possibility of profits and losses; command systems don't face risk because they are not profit driven.

---

Definitions:

Permanent Replacement Workers

Employees hired on a permanent basis to substitute for workers who are on strike, ensuring continued operations.

Purchasing Power

The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy.

Unemployment

The total number of people over 16 who are ready, willing, and able to work, who have been unsuccessfully seeking employment.

Closed Shop Agreement

A labor agreement requiring employees to be members of a specific union as a condition of being hired and to remain in the union for the duration of their employment.