Question

Without a strong legal systems in a market economy:

Answer 1

Answer:

A) private-sector entrepreneurs can expropriate the profits generated by the efforts of private and public entities.

Explanation:

• As there exist four basic structures of the market economy in the form of perfect competition, imperfect competition, oligopoly, and monopoly.  

• Thus without any legal system of trade in the market economy, the profits that are generated by the public and private sectors can be taken away by these entities as a large number of small firms tends to compete in the market against each other with there homogenous products.

• Thus under such circumstances, the market economy would deprive all the profits made by the other forms in the market and put barriers to entry for others. Buyers thus will be deprived of the quality products.