The concept of creative destruction, as used by economist Joseph Schumpeter, involvesa)firms getting creative with learning by doing, but this spirit is destroyed by the inability of firms to finance RandD expendituresb)creation of new products and production methods that would destroy the market for existing productsc)invention that would create new products, followed by diffusion that would destroy many potentially good ideasd)innovation that leads to monopoly power and ultimately to destruction of the ideaCorrect answer is option 'B'. Can you explain this answer?

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The concept of creative destruction, as used by economist Joseph Schumpeter, involves

a)
firms getting creative with learning by doing, but this spirit is destroyed by the inability of firms to finance R&D expenditures
b)
creation of new products and production methods that would destroy the market for existing products
c)
invention that would create new products, followed by diffusion that would destroy many potentially good ideas
d)
innovation that leads to monopoly power and ultimately to destruction of the idea

Correct answer is option 'B'. Can you explain this answer?

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The concept of creative destruction, as used by economist Joseph Schu...

Creating something new for the same need will naturally destroy the need for the earlier existing product.

Answered by Wizius Careers · View profile

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The concept of creative destruction, as used by economist Joseph Schu...

Understanding Creative Destruction
Creative destruction is a fundamental concept introduced by economist Joseph Schumpeter, describing the process through which innovation leads to the demise of older products and production methods, ultimately driving economic development.
Key Elements of Creative Destruction
- Innovation as a Catalyst
Creative destruction emphasizes how new technologies and innovative ideas disrupt existing markets. This disruption is crucial for economic progress.
- Destruction of Existing Markets
As new products emerge, they often render older products obsolete. This shift can lead to the decline of established companies that fail to adapt, illustrating the "destruction" aspect of the theory.
- Examples of Creative Destruction
- Smartphones vs. Traditional Phones: The rise of smartphones has significantly diminished the market for traditional mobile phones.
- Digital Media vs. Print: The advent of digital media platforms has transformed how people consume news, leading to declines in print media.
Importance of Option B
- Alignment with Schumpeter's Theory
Option B accurately captures the essence of creative destruction by highlighting how new products and production methods disrupt existing markets. This aligns with Schumpeter's view that innovation is essential for economic evolution.
- Contrast with Other Options
Other options either misinterpret the concept or focus on aspects that do not directly relate to the destructive element of innovation. For instance:
- Option A emphasizes financing challenges, which is not central to the concept.
- Option C discusses the diffusion of ideas rather than the impact on existing markets.
- Option D suggests a focus on monopoly power, diverting from the core idea of destruction through innovation.
In summary, creative destruction is a driving force behind economic growth, characterized by the emergence of new products that displace older ones, serving as a critical mechanism for progress in the marketplace.

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The concept of creative destruction, as used by economist Joseph Schumpeter, involvesa)firms getting creative with learning by doing, but this spirit is destroyed by the inability of firms to finance R&D expendituresb)creation of new products and production methods that would destroy the market for existing productsc)invention that would create new products, followed by diffusion that would destroy many potentially good ideasd)innovation that leads to monopoly power and ultimately to destruction of the ideaCorrect answer is option 'B'. Can you explain this answer?

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The concept of creative destruction, as used by economist Joseph Schumpeter, involvesa)firms getting creative with learning by doing, but this spirit is destroyed by the inability of firms to finance R&D expendituresb)creation of new products and production methods that would destroy the market for existing productsc)invention that would create new products, followed by diffusion that would destroy many potentially good ideasd)innovation that leads to monopoly power and ultimately to destruction of the ideaCorrect answer is option 'B'. Can you explain this answer? for CAT 2025 is part of CAT preparation. The Question and answers have been prepared according to the CAT exam syllabus. Information about The concept of creative destruction, as used by economist Joseph Schumpeter, involvesa)firms getting creative with learning by doing, but this spirit is destroyed by the inability of firms to finance R&D expendituresb)creation of new products and production methods that would destroy the market for existing productsc)invention that would create new products, followed by diffusion that would destroy many potentially good ideasd)innovation that leads to monopoly power and ultimately to destruction of the ideaCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CAT 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The concept of creative destruction, as used by economist Joseph Schumpeter, involvesa)firms getting creative with learning by doing, but this spirit is destroyed by the inability of firms to finance R&D expendituresb)creation of new products and production methods that would destroy the market for existing productsc)invention that would create new products, followed by diffusion that would destroy many potentially good ideasd)innovation that leads to monopoly power and ultimately to destruction of the ideaCorrect answer is option 'B'. Can you explain this answer?.

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