Which of the following creates an unfavorable environment for innovati

QUESTION

Which of the following creates an unfavorable environment for innovations and entrepreneurship?

A. Market economy

B. Economic freedom

C. State monopoly in production

D. Privatization

E. Strong legal protection of property rights

ANSWER

C
In a planned economy, the state owns all means of production. Consequently, entrepreneurial individuals have few economic incentives to develop valuable new innovations, because it is the state, rather than the individual, that captures most of the gains.