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

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Definitions:

IDEATE Method

A process or approach in innovation and problem-solving that focuses on generating, developing, and communicating new ideas.

Eli Whitney

An American inventor best known for inventing the cotton gin, a significant invention in the agricultural sector.

Thomas Edison

An American inventor and entrepreneur who developed many important devices in the late 19th and early 20th centuries, including the electric light bulb and the phonograph.

Cotton Gin

A machine invented by Eli Whitney in 1793 to quickly and efficiently separate cotton fibers from their seeds, revolutionizing the cotton industry.