[Please do not answer this question without answering the six questions simply because of the point value it contains. Don't be one of those people who answers the questions with the bare minimum response. Please answer these questions with actual consideration and care. I'd appreciate it. I'll mark you Brainliest for whichever one of you provides a thorough and in-depth answers and explanations. Thank you.] Read the document and answer the following questions:
Adam Smith - Excerpts from An Inquiry into the Nature and Causes of the Wealth of Nations (1776)
On the effect of individual gain on society:
“By directing that industry in such a manner as its product may be of greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”
On what makes an economy advance:
“It is not from the benevolence[kindness] of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest.”
On the role of government:
“The sole purpose of all production is to provide the best possible goods to the consumer at the lowest possible price. Society should assist producers of goods and services only to the extent that assisting them benefits the consumer... he [the consumer] intends his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was not part of his intention By pursuing his own interest, he frequently promotes that of the society”
“According to this liberal and generous system, therefore, the most advantageous method in which a landed nation can raise up artificers (craftsmen), manufacturers, and merchants of its own, is to grant the most perfect freedom of trade to artificers, manufacturers and merchants of all nations.”
On monopolies:
“A monopoly granted either to an individual or to a trading company has the same effect as a secret in trade or manufacture. The monopolists, by keeping the market constantly understocked, by never fully supplying the effectual demand, sell their commodities much above the natural price, and raise their emoluments, whether they consist in wages or profit, greatly above their natural rate. The price of monopoly is upon every occasion the highest which can be obtained. The natural price, or the price of free competition, on the contrary, is the lowest which can be taken, not upon every occasion, indeed, but for any considerable time together.”
Questions
1. Smith, in the first paragraph uses the word “industry” to describe the work that a person does. When an individual works for their own benefit, how is society affected? When an individual works for their own benefit, society is affected by
2. Restate the second paragraph in your own words.
3. What does Smith see as the role of government in the free trade of goods and services?
4. What happens to prices when there is a free competitive market?
5. With relation to question number four, what does Smith believe about the role of government in market system? (government involvement)
6. What effect does a monopoly have on consumer prices?