The correct option is (c) 2 and 3 only.
Explanation
Market mechanisms operate primarily on the principles of demand, supply, and profit maximization. While markets can generate wealth and efficiency, they are not inherently designed to ensure social equity or equal distribution of resources. Without intervention, market forces often exacerbate existing inequalities.
Statement-wise Analysis
- Statement 1 is Incorrect. The market does not guarantee equal earnings for all participants. Earnings in a market economy are determined by factors such as skills, demand for specific services, ownership of assets, and bargaining power. Consequently, individuals with different economic statuses earn differently.
- Statement 2 is Correct. Market outcomes tend to favor those who possess capital, resources, and skills. Individuals with higher initial endowments (wealth, education, or technology) are better positioned to leverage market opportunities, leading to wealth accumulation.
- Statement 3 is Correct. Due to unequal bargaining power, the rich and powerful are often able to dictate terms and maximize their earnings. Conversely, the poor, lacking resources and alternatives, may be compelled to work for low wages, leading to exploitation within an unregulated market framework.
Key Takeaway: Markets are neutral to equity; they reward capital and efficiency. Therefore, state intervention and inclusive growth strategies are necessary to prevent the concentration of wealth and protect vulnerable sections from exploitation.