Question

This question is about graph A. If Turkana's economy moves from point D to point C that will allow this economy

	A.	to produce more industrial pumps while Cheese production will remain the same.
	B.	to produce more Cheese at the expense of industrial pumps.
	C.	to produce fewer boxes of Cheese and industrial pumps.
	D.	to produce more industrial pumps and more boxes of Cheese..
	E.	to produce more Cheese and the same number of industrial pumps.

Adam Smith's concept of the "invisible hand" refers to

	A.	how the working to the market is similar to the invisible hands of the puppeteer.
	B.	the invisible activities within the firms.
	C.	the competition in the marketplace.
	D.	the firms' desire to conspire against the buyers.

Capital is

	A.	the non-human productive capacity.
	B.	the total value of stocks held by the public.
	C.	the total value of corporate bonds held by the public.
	D.	the amount of money supply.

Answer 1

From "invisible hand" we find that it signifies the working to the market and the price mechanism that is similar to the invisible hands of the puppeteer. The reason is that market forces of demand and supply interact with each other to establish price and quantity at the equilibrium. There is no interference in such an equilibrium. Hence, Option A is correct.

Capital is the non-human productive capacity. The reason is that it is the resources whose amount cannot be changed buy human effort. However, it is used as a factor of production in manufacturing of goods so it does have a capacity to produce. Hence, Option A is correct.