This Marketing the Connection argues that a key difference between market economies and centrally planned economies, like the former Soviet Union, is that
"In market economies, decisions about which investments to make and which technologies to adopt are made by entrepreneurs and managers with their own money on the line. In the Soviet system, these decisions were usually made by salaried bureaucrats trying to fulfill a plan formulated in Moscow."But in large corporations, investment decisions are often made by salaried managers who do not, in fact, have their own money on the line. These managers are spending the money of the firm's shareholders rather than their own money.
The investment decisions of salaried managers int he United States tend to be better for the long-term growth of the economy than were the decisions of salaried bureaucrats in the Soviet Union because:
A. Soviet managers feared losing their jobs if they adopted new technologies
B. U.S. managers are driven by incentives of higher profits, leading them to adopt new technologies
C. U.S. managers face no competition from domestic and foreign firms
D. Soviet bureaucrats concentrated on cutting costs as they faced intense competition from home and abroad
Answer: B