Question

The process of creative destruction
   
A. refers to Adam Smith’s idea that the competitive process will eventually causes wages to fall that can destroy industries (because the fall of wages (which decreases overall income) will cause demand to fall.)
B. evidences the destructive role of innovation that often arises from the creative economic structures implemented by or through government supported initiatives.
C. discounts the impact or significance of dead-weight loss in evaluating the economic role of price searchers in an economy because, for example, monopolistically competitive firms not only price above marginal cost but also innovate and create new products.
D. refers to the role of price competition. Specifically, that price competition is the most important form or type of competition because by lowering prices firms “destroy” other firms and create new markets.
E. refers to the fact that only price taking firms compete or, at the very least, they compete more than price searchers do.

Answer 1

Q. The process of creative destruction

Answer- (B) evidences the destructive role of innovation that often arises from the creative economic structures implemented by or through government supported initiatives.

Note- Schumpeter describes creative destruction as the "process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one." Creative destruction theory treats economics as an organic and dynamic process.