Encourage enterprise and risk taking is considered as a merit of which of the following economy?
Options
ASocial economy
BPolitical Economy
CMixed Economy
DManagerial economy
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Introduction to Business EconomicsPYQ Jun 23Question 622 of 209
All Questions Correct Answer
✅ Option c — Mixed Economy
All Options:
- ASocial economy
- BPolitical Economy
- CMixed Economy
- DManagerial economy
Detailed Solution & Explanation
• The question asks which economic system encourages enterprise and risk-taking. This refers to the ability of individuals and businesses to innovate, start new ventures, and take calculated risks for potential profit.
• A Mixed Economy is the correct answer. It combines elements of both capitalism (market economy) and socialism (command economy). In a mixed economy, private ownership and free markets exist alongside government intervention and public services.
• The capitalist elements within a mixed economy are what primarily encourage enterprise and risk-taking. Private individuals and firms are allowed to own resources, produce goods and services, and compete in markets. This profit motive drives innovation and encourages entrepreneurs to take risks to gain market share and generate wealth. While there is government regulation, it generally aims to correct market failures rather than stifle private initiative entirely.
• Social economy (or socialist economy) is incorrect because it emphasizes collective ownership and central planning. While it aims for social welfare, it typically limits private enterprise and risk-taking, as production decisions are often made by the state, reducing individual incentive for innovation and risk.
• Political Economy and Managerial Economy are not types of economic systems in the same way as social or mixed economies. Political economy studies the relationship between politics and economics, while managerial economy applies economic principles to management decisions within firms. Neither describes an overarching system that encourages enterprise and risk-taking as a fundamental characteristic.
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 SyllabusExam 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.
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