Adam Smith Asserted That a Person Should Never Attempt to Make

question 193

Multiple Choice

Adam Smith asserted that a person should never attempt to make at home

• A)what it will cost him more to make than to buy.
• B)any good in which that person does not have an absolute advantage.
• C)any luxury good.
• D)any necessity.

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Definitions:

Opportunity Cost

The expense incurred by not choosing the second-best option available during the decision-making process.

Bank Loan

A sum of money borrowed from a bank that must be repaid with interest over a set period.

Diminishing Marginal Product

The principle that as the quantity of a factor of production increases, holding all other inputs constant, the additional output generated by one more unit of that factor will eventually decrease.

Total Cost Function

A mathematical relationship expressing the total cost of production as a function of the quantity of output.