Introduction to Business EconomicsMTP Apr 24Question 580 of 209
All Questions

Which of the following is not the demerit of Capitalism:

Options

AThere is usually high degree of operative efficiency under capitalism
BUnder Capitalism there is precedence of property right over human rights
CDue to income inequality the pattern of demand does not represent the real needs of the society.
DCapitalism leads to formation of monopolies
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Correct Answer

✅ Option a — There is usually high degree of operative efficiency under capitalism

All Options:

  • AThere is usually high degree of operative efficiency under capitalism
  • BUnder Capitalism there is precedence of property right over human rights
  • CDue to income inequality the pattern of demand does not represent the real needs of the society.
  • DCapitalism leads to formation of monopolies

Detailed Solution & Explanation

• The question asks to identify which statement is NOT a demerit (disadvantage) of Capitalism. This means we are looking for a statement that describes an advantage or a neutral characteristic. • Option (A) states, "There is usually high degree of operative efficiency under capitalism." This is generally considered a *merit* or advantage of capitalism. The competitive nature of capitalist markets incentivizes firms to produce goods and services efficiently to minimize costs and maximize profits, leading to better resource allocation and innovation. Therefore, this statement is not a demerit. • Option (B) states, "Under Capitalism there is precedence of property right over human rights." This is a common criticism and a demerit of capitalism. Critics argue that the emphasis on private property can sometimes overshadow social welfare and human needs, especially for those without significant property. • Option (C) states, "Due to income inequality the pattern of demand does not represent the real needs of the society." This is also a significant demerit of capitalism. High income inequality means that demand is often driven by the purchasing power of the wealthy, rather than the essential needs of the entire population. Goods and services might be produced for those who can afford them, even if more pressing societal needs go unmet. • Option (D) states, "Capitalism leads to formation of monopolies." This is a well-recognized demerit. While competition is a hallmark of capitalism, unchecked market forces can sometimes lead to the concentration of power in the hands of a few large firms, resulting in monopolies or oligopolies. These can stifle competition, exploit consumers, and reduce overall economic efficiency. • Since the question asks for what is NOT a demerit, and Option (A) describes an advantage (high operative efficiency), it is the correct answer.

About This Chapter: Introduction to Business Economics

Paper

Paper 4: Business Economics

Weightage

5%

Key Topics

Meaning, Scope, Price Mechanism

This chapter lays the groundwork for understanding Business Economics as a discipline. It covers the meaning, scope, and nature of economics — including key distinctions like Microeconomics vs Macroeconomics, Positive vs Normative economics, and the fundamental economic problem of scarcity. Students learn how businesses use economic principles for decision-making in a competitive marketplace.

View Official ICAI Syllabus

Exam Strategy Tip

Focus on definitions and distinctions between concepts. Questions often test whether you understand the difference between Micro and Macro, or Positive and Normative statements.

Related Comparison Tables

Microeconomics vs Macroeconomics: The Complete CA Foundation GuidePositive vs Normative Economics: Fact vs Opinion

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