2.2.F - Lesson: Adam Smith and The Wealth of Nations & Division and Specialization of Labor & Economic Systems Review

Why did Adam Smith believe competition was an important part of a prosperous economy?

Competition encourages businesses to use resources efficiently. Competition keeps prices in check.

What is Adam Smith known as the father of?

Father of Economics

According to Adam Smith, why does division of labor improve the performance and productivity of workers? (choose all that apply)

It reduces every worker's business to one simple task. It makes one task the sole employment of the worker's life.

What is the title of the first chapter in The Wealth of Nations?

Of the Division of Labour

What was Adam Smith's first work?

The Theory of Moral Sentiments

Which of the following are the three basic economic questions? (choose all that apply)

Who will consume these goods and services? How will these goods and services be produced? What goods and services will be produced?

In economics, individuals who purchase goods and services are called _______.

consumers

Adam Smith argues that the greatest improvement in the productivity of labor has come about because of the effects of ________.

division of labor

Mercantilism was a national economic system based on maximizing _______ and minimizing _______.

exports imports

Which of the following are economic theories that Adam Smith supports and argues for in The Wealth of Nations? (choose all that apply)

free trade division of labor

In a command economy, who is primarily responsible for deciding how goods and services will be produced?

government

Adam Smith argued that if people were allowed to act in their own self-interest, the marketplace would be directed by an "invisible _____."

hand

Adam Smith believed government should take a mostly laissez-faire, or ________ approach to managing the economy.

hands-off

According to Adam Smith, division of labor helps workers improve their _______ more quickly.

performance

In the first chapter of The Wealth of Nations, what type of factory did Adam Smith use as an example of division of labor?

pin factory

In economics, people who create goods and services are known as _______.

producers

In a market economy _______________________.

resources are controlled by the people

A government incentive or tax break designed to assist a specific industry is known as a _______.

subsidy

In The Wealth of Nations, Adam Smith argues that division of labor reduces _______________.

the amount of time lost by switching from one task to another

If a new technology was created to help farmers grow more crops, which of the following economic systems would be LEAST likely to use it?

traditional economy