Which of the following is a primary benefit of entrepreneurial competition?

• A. It ensures that only large firms survive.
• B. It leads to increased innovation and improved products.
• C. It guarantees equal income for all participants.
• D. It eliminates all market failures.

Answer: (B)

Verified step by step guidance

1. Understand the concept of entrepreneurial competition: it refers to the rivalry among entrepreneurs to develop new products, services, or processes to attract customers and gain market share.
2. Recognize that entrepreneurial competition encourages firms to innovate because innovation can provide a competitive edge, helping firms differentiate their products and attract more customers.
3. Analyze the options given: 'ensures only large firms survive' is incorrect because competition can allow small firms to thrive if they innovate effectively; 'guarantees equal income' is incorrect because competition does not ensure income equality; 'eliminates all market failures' is incorrect because market failures can still exist despite competition.
4. Identify that the primary benefit of entrepreneurial competition is that it leads to increased innovation and improved products, as firms strive to outperform each other by offering better value to consumers.
5. Summarize that entrepreneurial competition drives economic progress by fostering innovation, improving product quality, and enhancing consumer choice.