4
QuizMultiple Choice

Comparing Economic Systems — Quiz

Question 4 • MASTER COURSE United States History

What is one disadvantage of a market economy?

Answer
A
A market economy limits competition and profit.
B
A market economy discourages innovation.
C
A market economy creates income inequalities.
D
A market economy reacts slowly to changing needs.

Explanation

In a market economy, people and businesses earn different amounts based on factors such as skills, resources, and the success of their businesses. This can lead to income inequalities, which is a disadvantage. Competition and the pursuit of profit often encourage innovation and can help markets respond to changing needs, so the other choices do not describe typical disadvantages.

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