Economics 9708 · AS & A Level · Resource allocation in different economic systems

Resource allocation in different economic systems — practice question

Which statement about a market economy is incorrect?

  • ACompetition is promoted among firms which can increase productive efficiency.
  • BImmobility of the factors of production can lead to allocative inefficiency.
  • CPrice always reflects all the costs and all the benefits associated with production.
  • DThe entrepreneur is encouraged to innovate and take risks, motivated by profit.

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