Question

1. According to Smith, when individuals invest their capital in industry, they are generally trying to A. ask the government to control commerce. B. nurture trade with foreign countries. C. gain the greatest possible profit. D. promote the public good of their country.

Answer 1

According to Smith the correct answer is C. gain the greatest possible profit.

Adam Smith says when an individual invests their capital in domestic industry he is searching for the greatest value this capital can return for him, but by doing it the society will also benefit.

A. ask the government to control commerce this option is wrong as he thinks the market must be free and open, thus the government responsibilities should be limited to matters related to education, defence or infrastructure.

B. nurture trade with foreign is wrong because he arguments for local investment and even to lay tax on foreign products for internal economic grown and to encourage domestic economy.

D. promote the public good of their country, this option is not correct because the promotion of the public good is done by daily choices not by investing capital in industry.

Answer 2

The correct answer is C) To gain the greatest possible profit.

Adam Smith is well known for his economic philosophies written in his book Wealth of Nations. This influential book about capitalism and laissez faire economics helped to develop America's modern economic system.

In his book Wealth of Nations, Adam Smith advocates no government intervention in the economy. Instead, he argues that competition between businesses will result in the best possible outcome for society. Along with this, Smith argues that when individuals act selfishly, they will help society as a whole. This is because acting in your own best interest will result in lower prices or hiring more workers. These types of effects have a positive impact on the society as a whole.