Question

According to adam smith, by pursuing its self-interest (maximizing profits), a firm tends to?

Answer 1

According to Adam smith, by pursuing its self-interest (maximizing profits), a firm tends to meet the needs of society.

Who is Adam smith?

Scottish economist and philosopher Adam Smith was a leading proponent of political economy and a pivotal figure in the Scottish Enlightenment. According to Adam Smith's economic theory, markets typically function most effectively when the government keeps out of the way. A result of Adam Smith's beliefs on capitalism, free markets, and supply and demand, he is referred to as the "father of economics." Smith supported the idea of taxing income, profits, sales, and labor.

The Law of Demand and Supply, the Law of Self Interest, and the Law of Competition are Adam Smith's three economic laws. According to these laws, sufficient commodities would be produced at the lowest cost to satisfy demand in a market economy, and better items would be produced at lower costs owing to competition.

Hence, According to Adam smith, by pursuing its self-interest (maximizing profits), a firm tends to meet the needs of society.

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