Economics (AS & A Level) · Feb / March 2025 · Paper 12 · Question 1
9708Resource allocation in different economic systems
Which statement about a market economy is not correct?
- 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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Correct answer: C. Price always reflects all the costs and all the benefits associated with production.
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