Question

Which of these statements is true according to Adam Smith's theories?

A) Factory owners would have to share their profits with the working class.
B) The "invisible hand" would prevent the exploitation of workers.
C) All class differences would eventually fade away.
D) A free market would benefit consumers as well as producers.

Answer 1

D) A free market would benefit consumers as well as producers.

Answer 2

D) A free market would benefit consumers as well as producers.

Step-by-step explanation:

Adam Smith is known as the "father of capitalism." Smith argues that the best type of economy is one in which the government gets involved as little as possible. This idea is known as laissez faire economics.

Smith was an advocate of the "invisible hand." This was the idea that competition between businesses will ensure that businesses act in the best interest of citizens. When businesses compete, they must offer the consumer a competitive price for their goods or service. Otherwise, they will go out of business.

This is why Smith believed that the free market would benefit the consumers as well as the producers.