Which of the following illustrates what happens when supply
and demand work as they should, according to Adam
Smith? (1 point)
There is enough supply of a given product to meet
consumer demands.
Consumers make companies create new types of
products.
Companies make more of a product even though few
people buy it.
Governments open new factories to meet demand for
goods.
There is enough supply of a given product to meet consumer demands.
The correct answer that illustrates what happens when supply and demand work as they should, according to Adam Smith, is "There is enough supply of a given product to meet consumer demands."
According to Adam Smith, a prominent economist and philosopher, when supply and demand work as they should, there is enough supply of a given product to meet consumer demands.
To identify the answer, we need to understand Adam Smith's principles. Smith believed in the concept of the "invisible hand," which suggests that in a free market, self-interested individuals acting in their own self-interests will inadvertently promote the broader interests of society.
Let's analyze the options:
1. There is enough supply of a given product to meet consumer demands.
This option aligns with Adam Smith's principles, as it indicates that supply and demand are working correctly. It implies that the market provides enough of a product to satisfy consumer needs.
2. Consumers make companies create new types of products.
While consumers can influence companies to create new products through their demand, this option does not directly illustrate the workings of supply and demand according to Adam Smith.
3. Companies make more of a product even though few people buy it.
This option goes against the principles of supply and demand. In a functioning market, companies would not continue to produce a product if there is low demand for it.
4. Governments open new factories to meet demand for goods.
This option involves government intervention, which is not in line with Adam Smith's philosophy. He believed in limited government involvement in the economy.
Based on the analysis, option 1 is the best choice as it reflects Adam Smith's idea that enough supply is available to satisfy consumer demands.