The Idea of the "Invisible Hand" Discussed by Scottish Economist

question 53

Multiple Choice

The idea of the "invisible hand" discussed by Scottish economist Adam Smith is that

• A) the government needs to step in to manipulate the market in order for it to work efficiently.
• B) when individuals pursue their rational self-interest, the market operates effortlessly and efficiently.
• C) individuals cannot act rationally and therefore must be guided by the government.
• D) economic vitality is not possible under capitalism.
• E) the government should not let individuals pursue their own particular interests without regulation, or the market will not work efficiently.

Analyze how geographical and customer structures cater to regional and customer-specific needs.

Explain how divisional structures support product, service differentiation, and customer satisfaction.

Understand the challenges and complexities involved in managing organizational structures.

Understand the relevance and applicability of CVP analysis in management functions.

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Definitions:

Monopolistically Competitive

Describes a market structure where many firms offer products that are similar but not perfect substitutes, leading to competitive pricing but with some degree of market power.

Excess Capacity

The amount of production capability that is not being used by a firm or within an economy.

Excess Capacity

Refers to the situation where a firm is producing at a lower scale of output than it has been designed for.

Monopolistically Competitive

A market structure characterized by many firms selling products that are similar but not identical, allowing for competitive pricing and differentiation.