A Key Principle of Adam Smith's Economic Theory Was That

question 11

Multiple Choice

A key principle of Adam Smith's economic theory was that

• A)human behavior is inherently irrational.
• B)government should not interfere in the economy.
• C)monopolies promote economic well-being.
• D)mercantilism is the only viable economic system.
• E)laissez faire was a dangerous econo-political theory.

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Definitions:

Purely Competitive

A market structure characterized by many small firms producing an identical product, where no single firm can influence the market price.

Wage Rate

The fixed amount of compensation paid to an employee by an employer in exchange for work performed, typically expressed per hour or year.

Purely Competitive

A market situation characterized by a large number of small firms, no barriers to entry or exit, homogenous products, and perfect information among buyers and sellers, leading to the efficient allocation of resources.

Imperfectly Competitive

A market structure where individual sellers have some control over the prices due to lack of perfect competition.