14. To Schumpeter, the chief cause of disequilibrium in a competitive economy is
ID: 1127410 • Letter: 1
Question
14. To Schumpeter, the chief cause of disequilibrium in a competitive economy is
a. profit seeking firms.
b. consumers.
c. the entrepreneur.
d. the capitalist.
15. According to Schumpeter, the essential characteristic of the entrepreneur is the possession of
a. intelligence.
b. new knowledge.
c. money.
d. none of the above.
16. Entrepreneurship does not include
a. the creation of a new product.
b. improving the quality of a product.
c. management.
d. the creation of a monopoly.
17. In Schumpeter’s opinion, people act as entrepreneurs when they:
a. carry out new combinations.
b. have established a mature business.
c. are engaged in the management of their business.
d. all of the above.
18. The conditions for perfect competition are the conditions necessary to
a. make equilibrium determinate.
b. promote a large number of buyers and sellers.
c. promote free entry and exit.
d. all of the above.
19. Hayek maintained that the competitive market process is a
a. theoretical impossibility.
b. discovery procedure.
c. coordination process.
d. b. and c.
20. Contemporary Austrian economist Israel Kirzner maintains that the theory of monopolistic competition rules out
a. the discovery process.
b. the need to find new products.
c. the need to vary products.
d. all of the above.
21. Kirzner maintains that monopoly simply means
a. absence of competition.
b. absence of exit barriers.
c. barriers to entry.
d. no market process.
Explanation / Answer
14) As per Schumpeter , whenever there is an innovation , it causes disequilibrium in the economy . So disequilibrium is caused by c. the entrepreneur.
15) Enterpreneurs are the people who carry out new combinations in production or innovation . b. new knowledge.
16) Entrepreneurship does not include d. the creation of a monopoly.
Entrepreneurship includes innovation and management of business but monopoly is created due to economies of scale or capturing of market share .
17) In Schumpeter’s opinion, people act as entrepreneurs when they:
a. carry out new combinations.
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