Adam Smith argues in the Wealth of Nations that an economy will produce more goods and services if

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First, let's restate the question and the options clearly to set the stage for evaluation.
Question: Adam Smith argues in the Wealth of Nations that an economy will produce more goods and services if
Options:
a. the government controls the use of the nation's scarce resources.
b. people act in the public interest than if they act in their own self-interest.
c. people ignore their own interests and contribute to national wealth as a whole.
d. people act in their own self-interest, than if the government directs economic activity.

Now, evaluate each option in turn.
Option a: 'the government controls the use of the nation's scarce resources.' This contradicts Smith's famous argument for limited government intervention and the efficiency of free markets. Centralized control tends to reduce the incentives for efficient resource allocation and can lead to misallocation due to bureaucratic decision-making. Therefore, this is not consistent with Smith’s claim.
Option b: 'people act in the public interest than if they act in their own self-interest.' The notion here suggests people are primarily motivated by the public good rather than self-interest. Smith explicitly emphasizes self-interest as the driver of productive activity, with the invisible hand guiding resources toward social benefits. So this option misstates the motivational premise.
Option c: 'people ignore their own interests and contribute to national wealth as a whole.' This posits a collective disregard for personal interest, which runs counter to Smith’s argument that self-interest underpins economic activity. While coordination can occur, Smith does not claim people ignore personal interests; he argues they pursue self-interest in a way that benefits others through market mechanisms.
Option d: 'people act in their own self-interest, than if the government directs economic activity.' This aligns with Smith’s core assertion that individual self-interest, operating within competitive markets with limited government intervention, leads to more efficient production and wealth. The comparison implies government-directed activity is less effective, which matches the traditional reading of Smith.

In summary, options a, b, and c each misrepresent Smith’s central claim by either advocating government control, misattributing motivations to public-spirited behavior, or denying the role of self-interest. Option d correctly captures the essence of Smith’s argument about the profitability of voluntary exchange and the efficiency of markets driven by self-interest compared to heavy government direction.

252_EC201 Microeconomics

Adam Smith argues in the Wealth of Nations that an economy will produce more goods and services if

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