1. Self-interest a. is never to anyone’s benefit other than to the selfish perso
ID: 1134558 • Letter: 1
Question
1. Self-interest
a. is never to anyone’s benefit other than to the selfish person.
b. can lead to the social good according to Adam Smith if government properly regulates behavior.
c. can lead to the social good according to Adam Smith but only in a commutarian society.
d. can lead to the social good according to Adam Smith when there is competition in the market place.
e. both c) and d) are correct.
2. Smith provides a philosophical argument for
a. a commutarian society.
b. the market economy.
c. economic individualism.
d. both b) and c) are correct.
3. Which of the following is (are) possible?
a. Both the nominal and the real price of a good can increase.
b. The nominal price of a good can increase, but the real price can decline.
c. The nominal price of a good can increase, but the real price can stay constant.
d. All of the above.
Explanation / Answer
NOTE- Answers are given in Bold and explanation in (bracket)
1. Self-interest
d. can lead to the social good according to Adam Smith when there is competition in the marketplace.
(Self-interest act as a motivator and competition act as a regulator. together they form the invisible hand as said by Adam Smith)
2. Smith provides a philosophical argument for
c. economic individualism.
(Capitalism is the misnomer for economic individualism. It means a type of society where individuals act in their best self-interest and have a right to own property with minimum government interference.)
3. Which of the following is (are) possible?
d. All of the above.
(Real price are adjusted for inflation but nominal prices are not)
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