The competitive market system:

Select one:
a. encourages innovation because government provides tax breaks and subsidies to those who develop new products or new productive techniques.

b. encourages innovation because successful innovators are rewarded with economic profits.

c. discourages innovation because it is difficult to acquire additional capital in the form of new machinery and equipment.

d. discourages innovation because firms want to get all the profits possible from existing machinery and equipment.
b

B- Encourages innovation because successful innovators are rewarded with economic profits.

Explanation:

The competitive market system is largely encouraging as it keeps firms and companies on their toes, encouraging fresh ideas and work plans, aimed at getting ahead of other competitors in the market.

When these competitive strategies birth successful innovations, economic profits are made by the innovators as there is an increased customer base, increased effectiveness and increased customer satisfaction by meeting needs through fresh ideas. This creates a consequential rice in profits which is the major target of every profit making organization.

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