Final answer:
A disadvantage of federalism is that it can lead to unhealthy competition between states, known as a 'race to the bottom', where states lower environmental and labor standards to attract businesses.
Step-by-step explanation:
Among the given options, the one that can be considered a disadvantage of federalism is Option 3: It can create unhealthy competition between states, such as lowering environmental standards and labor standards to attract businesses from other states. This phenomenon, known as a 'race to the bottom', can lead to a situation where states compromise on important standards to gain short-term economic advantages, potentially causing long-term harm to the environment and to workers' rights.
The benefits of federalism include the promotion of policy innovation, political participation, and the ability to accommodate diverse viewpoints. However, drawbacks such as the potential for economic disparities, the race-to-the-bottom dynamics, and the difficulty in addressing national problems cannot be overlooked.