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Outline four contributions of Adam Smith to economic thought - Leaving Cert Economics - Question 7 - 2013
Question 7
Outline four contributions of Adam Smith to economic thought. (i) (ii) (iii) (iv)
Worked Solution & Example Answer:Outline four contributions of Adam Smith to economic thought - Leaving Cert Economics - Question 7 - 2013
Step 1
(i) The pursuit of self-interest
Answer
Adam Smith argued that individuals pursuing their own self-interest would lead to economic benefits for society as a whole. This concept is foundational in understanding how markets operate efficiently, as individuals make choices that ultimately benefit the collective.
Step 2
(ii) The Division of Labour
Answer
Smith emphasized the importance of the division of labor, which increases productivity. By breaking down production processes into distinct tasks, workers can specialize, leading to more efficient production and ultimately contributing to economic growth.
Step 3
Step 4
(iv) 'Invisible hand of competition'
Answer
Smith introduced the concept of the 'invisible hand', which suggests that individuals seeking their own advantage in a free market inadvertently contribute to the overall economic progress. This principle underscores the effectiveness of competition in ensuring efficient resource allocation.