Question

1. Why did Adam Smith assert that "a free market economy would best promote economic growth and raise living standards?"

2. Why did Karl Marx predict that "the capitalist system of private ownership would eventually self-destruct?" 

3. What opportunity costs did you incur ?

4. Assume that it takes four hours of labor time to paint a room and two hours to sand a floor. If all 24 hours were spent painting, (a) How many rooms could be painted by one worker? (b) If a decision were made to sand two floors, how many painted rooms would have to be given up?

Answer 1

1. Adam smith asserted that a free market economy would best promote economic growth and raise living standards since the objective of profits would instigate capitalists to improve products, reduce prices, and advantage technology. And thus it would ultimately foster prosperity.

2. According to Karl Marx the capitalist who own the land, the factories, and the machinery will pursue to exploit the working class until it will rise up and overthrow the social order and thus predicted that the capitalist system of private ownership will eventually self-destruct.