Question

How does the tendency of 'making profits only' adversely affect the economy?

• A. People are motivated to work, which leads to efficiency.
• B. The idea of profit maximisation brings innovation.
• C. Competition among entrepreneurs increases, resulting in growth in economy.
• D. Profit maximisation can lead to economic disparity.

Answer 1

The correct option is D Profit maximisation can lead to economic disparity.

Profit maximisation makes the rich richer. The poor section of the society do not have much money to invest. They are often dependent on the government. This tendency can, thus, increase economic disparity.