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Which of the following would be considered a disadvantage of allocating resources using a market system?
- a)Income will tend to be unevenly distributed.
- b)Significant unemployment may occur.
- c)It cannot prevent the wastage of scarce economic resources.
- d)Profits will tend to be low.
Correct answer is option 'A'. Can you explain this answer?
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Which of the following would be considered a disadvantage of allocatin...
Disadvantage of allocating resources using a market system:
Uneven distribution of income:
One of the main disadvantages of allocating resources using a market system is that income tends to be unevenly distributed. In a market system, individuals and firms are free to pursue their own self-interests, which can lead to significant differences in income levels. This is because some individuals and firms are more successful than others in the market, and they can earn a higher income as a result. As a result, income inequality can be a significant problem in a market system.
Other possible options:
While the correct answer is 'A', it is important to note that the other options may also have some validity as potential disadvantages of allocating resources using a market system. These include:
- Significant unemployment may occur: In a market system, firms are free to hire and fire workers as they see fit. While this can lead to greater efficiency and productivity, it can also result in significant unemployment if firms are not able to find enough customers to support their businesses.
- It cannot prevent the wastage of scarce economic resources: In a market system, resources are allocated based on supply and demand. While this can be an efficient way to allocate resources, it may not always lead to the most sustainable use of resources. For example, if a certain resource is in high demand but is also scarce, the market may allocate too much of that resource to certain industries, leading to depletion of the resource over time.
- Profits will tend to be low: In a competitive market, firms may be forced to lower their prices in order to attract customers. While this can be good for consumers, it can also lead to lower profits for firms, which may discourage them from investing in new products or technologies.
Uneven distribution of income:
One of the main disadvantages of allocating resources using a market system is that income tends to be unevenly distributed. In a market system, individuals and firms are free to pursue their own self-interests, which can lead to significant differences in income levels. This is because some individuals and firms are more successful than others in the market, and they can earn a higher income as a result. As a result, income inequality can be a significant problem in a market system.
Other possible options:
While the correct answer is 'A', it is important to note that the other options may also have some validity as potential disadvantages of allocating resources using a market system. These include:
- Significant unemployment may occur: In a market system, firms are free to hire and fire workers as they see fit. While this can lead to greater efficiency and productivity, it can also result in significant unemployment if firms are not able to find enough customers to support their businesses.
- It cannot prevent the wastage of scarce economic resources: In a market system, resources are allocated based on supply and demand. While this can be an efficient way to allocate resources, it may not always lead to the most sustainable use of resources. For example, if a certain resource is in high demand but is also scarce, the market may allocate too much of that resource to certain industries, leading to depletion of the resource over time.
- Profits will tend to be low: In a competitive market, firms may be forced to lower their prices in order to attract customers. While this can be good for consumers, it can also lead to lower profits for firms, which may discourage them from investing in new products or technologies.
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Which of the following would be considered a disadvantage of allocatin...
If all the resources are allocated to capital economy then it would be beneficial for rich people because producers will produce those products which gave them high profits.. consequently poorer section will be more ignore and the gulf between them will be more huge..
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Which of the following would be considered a disadvantage of allocating resources using a market system?a)Income will tend to be unevenly distributed.b)Significant unemployment may occur.c)It cannot prevent the wastage of scarce economic resources.d)Profits will tend to be low.Correct answer is option 'A'. Can you explain this answer?
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