Question

produces considerable inefficiency in the use of scarce resources. effectively harnesses the incentives of workers and entrepreneurs. is not consistent with freedom of choice in the long run. has slowly lost ground to emerging command systems.

Answer 1

Complete Question:

The market system:

A. produces considerable inefficiency in the use of scarce resources.

B. effectively harnesses the incentives of workers and entrepreneurs.

C. is not consistent with freedom of choice in the long run.

D. has slowly lost ground to emerging command systems.

Answer:

B. effectively harnesses the incentives of workers and entrepreneurs.

Explanation:

An economic system can be defined as a series of governmental or societal arrangements and a coordinating mechanism used for the allocation of available resources, economic inputs, goods and services across a particular country. The economic system differs according to the method used to coordinate economic activities and who the factors of production belongs to.

Generally, there are basically two (2) main types of economic systems and these are;

1. Command systems.

2. Market systems.

The market system effectively harnesses the incentives of workers and entrepreneurs because workers are able to engage in division of labor and are well compensated for their efficiency in service while the entrepreneur are usually rewarded with an increase in sales and profits.

The market system allows participants to have property rights such as trademarks, patents and copyright. Also, market systems are regulated by the competition among individuals (traders or entrepreneurs) and this gives direction to the market as they pursue self interests and are independent.