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

Question

There is enough supply of a given product to meet consumer demands.

Consumers make companies create new types of products.

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

Governments open new factories to meet demand for goods.

Answer 1

The statement that illustrates what happens when supply and demand work as they should, according to Adam Smith, is:

"There is enough supply of a given product to meet consumer demands."

This reflects the ideal market situation where supply meets consumer demand, leading to a balance in the economy. Adam Smith's concepts emphasize free markets and how they naturally regulate through the interaction of supply and demand.