Smith-Lesson 9 Flashcards
Which book did Adam Smith write?
The wealth of nations
Which type of economy did Adam Smith believe in?
Free market
Which feature did Adam Smith believe would allocate resources in societies best interests?
The invisible hand
What are consumers motivated by?
Motivated to maximise their own benefit
What are producers motivated by?
Maximising profit
What 3 things does the invisible hand lead to?
.Lots of choice for customers
.Lower prices
.Factors of production being allocated exactly where they need to be
Who will prices work for in a free market?
Prices that work for both the buyer and selller
What is everything determined by?
Competition vs self interest
Under which circumstances does the government get involved with businesses?
Provide perfect conditions for the business to thrive
When Smith first entered the pin factory what was the rate of production?
.20 pin per worker-18 steps
What was the rate when of production when Smith left the factory?
10 worker
48,000 pins
