Adam Smith's Economic Theory of "Laissez-Faire" Called for Governments

question 9

Multiple Choice

Adam Smith's economic theory of "laissez-faire" called for governments

• A)to regulate their economies strictly.
• B)to leave individuals alone to choose what is in their best economic interests.
• C)to regulate trade with colonies,yet allow freedom for trade with other European countries.
• D)to regulate strictly only the most profitable trade.
• E)to regulate trade strictly only when threatened by another European country.

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Definitions:

Total Cost Line

A graphical representation showing the total cost associated with producing various levels of output.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed costs in a company's cost structure.

Operating Income

The profit realized from a business's core operations, calculated before interest and taxes are deducted.

Break-even Point

The level of production or sales at which total costs equal total revenue, meaning no net loss or gain is incurred; a crucial financial analysis metric.