Introduction to Business EconomicsExtraQuestion 678 of 209
All Questions

Which of the following is not a merit of socialist economy?

Options

AIt provides equal access to health care and education
BWorkers are no longer exploited because they own the means of production
CProfits are not spread equitably among all workers according to their individual contributions.
DNatural resources are preserved for the good of the whole
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Correct Answer

✅ Option c — Profits are not spread equitably among all workers according to their individual contributions.

All Options:

  • AIt provides equal access to health care and education
  • BWorkers are no longer exploited because they own the means of production
  • CProfits are not spread equitably among all workers according to their individual contributions.
  • DNatural resources are preserved for the good of the whole

Detailed Solution & Explanation

• The question asks to identify which statement is NOT a merit (advantage) of a socialist economy. • Let's analyze each option in the context of a socialist economy: • (A) It provides equal access to health care and education: This is a core principle and a significant merit of socialism. Socialist systems aim to reduce inequality by ensuring everyone has access to essential services regardless of their income. So, this is a merit. • (B) Workers are no longer exploited because they own the means of production: In a socialist economy, the means of production (factories, land, etc.) are collectively owned, often by the state or workers' cooperatives. This is intended to eliminate capitalist exploitation where private owners profit from workers' labor. So, this is considered a merit. • (C) Profits are not spread equitably among all workers according to their individual contributions: This statement describes a *demerit* or a criticism, not a merit. In a socialist system, the ideal is often to distribute resources and benefits more equitably, sometimes based on need or contribution. If profits are *not* spread equitably according to individual contributions, it implies a failure in the system's distribution mechanism or a deviation from its intended fairness, making it a disadvantage rather than an advantage. Therefore, this is the correct answer as it is NOT a merit. • (D) Natural resources are preserved for the good of the whole: Socialist economies, with central planning, often prioritize long-term societal well-being over short-term private profit. This can lead to better conservation and planned use of natural resources for the benefit of the entire community, rather than exploitation by a few. So, this is a merit. • Option (C) is the correct answer because it describes a situation that would be considered a drawback or a failure of the socialist ideal, not an advantage. Socialist economies generally aim for more equitable distribution, and if profits are *not* spread equitably, it goes against this aim. • Options (A), (B), and (D) are all generally considered merits or intended outcomes of a socialist economic system, aligning with its principles of equality, collective ownership, and societal welfare.

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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