Which of the following illustrates what happens when supply and demand work as they should, according to Adam Smith? (1 point)
Responses
Governments open new factories to meet demand for goods.
Governments open new factories to meet demand for goods.
There is enough supply of a given product to meet consumer demands.
There is enough supply of a given product to meet consumer demands.
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.
There is enough supply of a given product to meet consumer demands.
The correct option is:
There is enough supply of a given product to meet consumer demands.
The correct answer is "There is enough supply of a given product to meet consumer demands."
According to Adam Smith, the father of modern economics and a proponent of free markets, the interaction between supply and demand in a market leads to an equilibrium point where the quantity of goods or services supplied matches the quantity demanded. In this scenario, consumers' demands for a product determine the level at which it is supplied. If the demand for a product is high, companies would increase the supply to meet the demand, and conversely, if the demand is low, companies would decrease the supply.
To identify the answer, you need to choose the response that aligns with this concept. In this case, "There is enough supply of a given product to meet consumer demands" exemplifies how the market is functioning efficiently and effectively, just as Adam Smith intended.