,Adam Smith Made All of the Following Arguments for Laissez-Faire

question 45

Multiple Choice

,Adam Smith made all of the following arguments for laissez-faire capitalism,EXCEPT which of the following?

• A)The desire for profit is the invisible hand that guides a capitalist system.
• B)The government should not be allowed any role whatsoever in the economy.
• C)Private firms should be left alone to make their production and distribution decisions.
• D)Firms will try to use as few resources as possible in order to keep their prices low.
• E)Certain areas of the economy were better run by government agencies.

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Definitions:

Per-Unit Cost

The average cost for each product produced, calculated by dividing the total production costs by the total units produced.

Output

The total quantity of goods or services produced by a firm, sector, or economy within a certain period of time.

Explicit Costs

Payments by a firm to purchase the services of productive resources.

Implicit Costs

The opportunity costs associated with a firm’s use of resources that it owns. These costs do not involve a direct money payment. Examples include wage income and interest forgone by the owner of a firm who also provides labor services and equity capital to the firm.