Which of the following observations was made famous by Adam Smith in - ProProfs Discuss
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Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?



A. There is no such thing as a free lunch.
B. People buy more when prices are low than when prices are high.
C. No matter how much people earn, they tend to spend more than they earn.
D. Households and firms interacting in markets are guided by an \invisible hand\ that leads them to desirable market outcomes.
E. None of the above

This question is part of Principles of Economics QUIZ #1
Asked by Cypriot, Last updated: Mar 27, 2020

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2 Answers

Ken Wilson

Want to learn new things and share my knowledge

Ken Wilson, Marketing Analyst, MBA, Miami

Answered Jan 17, 2019

Letter D is the correct answer to this number. Adam Smith, a famous economist, quoted in his book that firms and households are guided by some invisible hand that leads them to market outcomes that are favorable for them. And that invisible hand is the prices to which a person makes a decision what he or she will buy or sell.

Because of these prices, people or the society actively participate on economic activities just by buying a carton of milk in the supermarket or selling their pre-loved car to a dealership thus making an impact on how strong their country’s economy is. It is how capable the people in strengthening their country’s economic power.

 

John Smith

John Smith

Answered Jun 19, 2017

Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes.
 

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