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27 September, 02:47

How does the free enterprise system contribute to technological innovations?

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  1. 27 September, 03:24
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    Free enterprise system stimulates competition because the firm that produces the best product with the lowest cost will be able to make more profits.

    So, the firms will invest in new technology that permits them to differentiate from the other firms, by producing a product with new or better characteristics or by increasing productivity.

    So, when firms are willing to invest in technology the result is that more people will be developing innovations.

    That is how free enterprise system contributes to technological innovations.
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