Question

Which of the following illustrates what happens when supply and demand work as they should, according to Adam Smith?(2 points)
Responses

Governments should not interfere with the economy.
Governments should not interfere with the economy.

Companies make more of a product even though few people buy it.
Companies make more of a product even though few people buy it.

Consumers make companies create new types of products.
Consumers make companies create new types of products.

Governments open new factories to meet demand for goods.
Governments open new factories to meet demand for goods.

Answer 1

Consumers make companies create new types of products.

Explanation: Under Adam Smith’s "invisible hand," consumer demand signals producers to supply what people want, so firms adjust output and innovate to meet consumers’ preferences.