[ANSWER]SOSC 2340: Take-Home Test

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To make sense of the contention that has surrounded Smith’s school of thought for centuries, attention to one of the key premises of his theory is important: the idea of market competition [ Home Test ]. Smith argued that the behavior of entities in product and labor markets is subject to market competition (Heilbroner & Thurow, 1998). For a firm to compete effectively in the market, it has no choice but to offer competitive prices – prices that are not above market prices. Equally, workers who desire to find employment cannot afford to ask above the market wage. To put it simply, the market has a natural way of instilling discipline in market actors.

In the real world, however, the invisible hand does not necessarily work as explained by Smith. According to Heilbroner and Thurow (1998), there are many instances in which market forces are not inevitably effective, such as tipping, hiring and firing of workers, and administration of taxation. What is more, not every good can be provided by the market [ Home Test ]. For example, some critical public goods such as law enforcement and defense cannot be left to market forces as suggested by Smith. In modern times, nonetheless, cases of the privatization of such public goods have…[Buy Full Answer for Just USD 9: 2023 WORDS]

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Type: Essay

Word Count: 2023

Grade/Mark: 93 (Distinction)

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