Which of the following is an example of creative destruction?
A)An economic recession forces firms out of business.
B)Automobile production causes the wagon industry to shut down.
C)Apple earns more economic profits than other manufacturers of MP3 players.
D)Starbucks shuts down stores to create greater demand for its remaining outlets.

Question

Quizplus · Accepted Answer

Creative destruction refers to the process by which new innovations lead to the obsolescence or replacement of older technologies or industries. The example of automobile production causing the wagon industry to shut down illustrates this concept, as the newer technology (automobiles) displaces the older one (wagons).

Which of the Following Is an Example of Creative Destruction