In His Book the Wealth of Nations, Adam Smith Employed

question 12

Multiple Choice

In his book The Wealth of Nations, Adam Smith employed the example of a pin factory in order to explain what economic concept?

• A)the relationship between the marginal and average product of labor
• B)the law of diminishing returns
• C)why no firm would want to hire so many workers as to experience a negative marginal product of labor
• D)the division of labor

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Definitions:

Price Competition

A market condition where businesses focus on undercutting competitors' prices to attract customers.

Profit Declines

A decrease in the difference between revenues earned and expenses incurred over a given period.

Analog TVs

Television systems that use analog signals to transmit video and audio as opposed to digital formats; now largely obsolete with the advent of digital broadcasting.

Product Life Cycle

The progression of a product through stages from introduction to growth, maturity, and decline.