Future Business Leaders of America (FBLA) Marketing Practice Test

Why does the government support the development of new products and services?

1. To reduce unemployment rates

2. To increase market competition

3. To ensure a monopoly on essential goods

4. To limit consumer choices

The correct answer is: To increase market competition

The government supports the development of new products and services primarily to increase market competition. When new products and services enter the market, they often lead to more choices for consumers, which can enhance overall satisfaction and meet diverse needs. The introduction of new players in a market can stimulate innovation, drive improvements in quality, and encourage lower prices as companies strive to attract customers. This competitive environment benefits consumers by promoting better services and fostering economic growth. In contrast, a monopoly on essential goods, as suggested in one of the options, would typically limit consumer choice and could lead to higher prices and decreased quality, which is contrary to the goals of fostering a dynamic economic environment. Limiting consumer choices, as indicated in another option, would not align with government initiatives aimed at encouraging product development and innovation. While reducing unemployment may be an ancillary benefit of fostering new products and services, the primary motive is rooted in enhancing market competition, which ultimately leads to a more robust and dynamic economy.