Introduction to Business EconomicsMODULEQuestion 769 of 209
All Questions

Which of the following is considered as a disadvantage of allocating resources using the market system?

Options

AIncome will tend to be uneven.
BPeople do not get goods of their choice.
CMen of Initiative and enterprise are not rewarded.
DProfits will tend to be low.
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Correct Answer

✅ Option a — Income will tend to be uneven.

All Options:

  • AIncome will tend to be uneven.
  • BPeople do not get goods of their choice.
  • CMen of Initiative and enterprise are not rewarded.
  • DProfits will tend to be low.

Detailed Solution & Explanation

To determine the correct answer, let's analyze the market system and its characteristics. • The market system is based on the principle of supply and demand, where resources are allocated based on market forces. • In a market system, individuals and businesses make decisions about how to allocate resources, and the market determines the prices of goods and services. • One of the key outcomes of the market system is that it can lead to an uneven distribution of income, as those who are more skilled or have more resources may be able to earn higher incomes. The correct answer is right because the market system can lead to income inequality, as it rewards those who are more productive or have more resources. • This is in line with the concept of Pareto efficiency, which states that resources are allocated efficiently when no one can be made better off without making someone else worse off, but it does not guarantee equal distribution of income. Some of the other options are incorrect because they do not accurately reflect the characteristics of the market system. • For example, people in a market system are generally free to choose the goods they want to buy, so it is not true that people do not get goods of their choice. • Additionally, the market system rewards initiative and enterprise, as individuals and businesses that are more innovative and efficient are often able to earn higher profits.

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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