Adam Smith Said, "It Is the Maxim of Every Prudent

question 62

Multiple Choice

Adam Smith said, "It is the maxim of every prudent master of a family never to attempt to make at home what it will cost him more to make than to buy. The tailor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes, but employs a tailor." Which of the following concepts best illustrates what Smith wanted to convey in this statement?

• A) comparative advantage
• B) incentives matter
• C) scarcity
• D) production possibilities frontier

Examine the interdependency between job satisfaction and performance.

Grasp the concept of emotional intelligence and its relevance to effective management.

Understand Kohlberg's model of cognitive moral development.

Analyze the consequences of unethical behavior on organizations.

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Definitions:

Payoff

The return or reward received from an investment or action.

Nash Equilibrium

A concept in game theory where each player's strategy is optimal given the strategies of all other players, leading to a situation where no player can benefit by changing strategies unilaterally.

Dominant Strategy

A strategy in game theory that yields the best outcome for a player, regardless of what strategies other players choose.

Nash Equilibrium

A concept in game theory where each player's strategy is optimal, given the strategies of other players, and no player has an incentive to deviate unilaterally.