Which of the following statements best describes how the market system promotes progress?

• A. By encouraging innovation and technological advancement through competition and profit incentives.
• B. By ensuring that all resources are distributed equally among all members of society.
• C. By preventing any changes in consumer preferences or production methods.
• D. By requiring government intervention in all economic decisions to achieve efficiency.

Answer: (A)

Verified step by step guidance

1. Understand the role of the market system in promoting economic progress. The market system relies on decentralized decision-making by individuals and firms, guided by prices and profit motives.
2. Recognize that competition among firms creates incentives to innovate and improve technology, as businesses seek to gain an advantage and increase profits.
3. Note that profit incentives motivate entrepreneurs to develop new products and more efficient production methods, which drives economic growth and progress.
4. Contrast this with other options: equal resource distribution is not a primary function of the market system, and preventing changes in preferences or production methods would hinder progress.
5. Also, understand that while government intervention can play a role, the market system primarily promotes progress through competition and profit incentives rather than requiring government control over all economic decisions.