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JAMB Economics 2012 Question 2

Question 2

Economic Systems

A major disadvantage of a socialist economy is that

  1. A.corruption is rampant
  2. B.consumers' sovereignty is lost
  3. C.income inequality is entrenched
  4. D.there is high level of unemployment.
Show the answer and explanation

Answer: B (consumers' sovereignty is lost)

Explanation

In a socialist economy the state decides what to produce, so consumers lose the power to direct production by their spending.