TEXT B

Adam Smith and His "Invisible Hand" Theory
　
Adam Smith, the Scottish professor of moral philosophy, was thrilled by his recognition of order in the economic system. His book, the Wealth of Nations (1776), is the germinal book in the field of economics which earned him the title "the father of economics".
　
In Smith's view, a nation's wealth was dependent upon production, not agriculture alone. How much it produced, he believed, depended upon how well it combined labor and the other factors of production. The more efficient the combination, the greater the output, and the greater the nation's wealth.
　
The essence of Smith's economic philosophy was his belief that an economy would work best if left to function on its own without government regulation. In those circumstances, self-interest would lead business firms to produce only those products that consumers wanted, and to produce them at the lowest possible cost. They would do this, not as a means of benefiting society, but in an effort to outperform their competitors and gain the greatest profit. But all this self interest would benefit society as a whole by providing it with more and better goods and service, at the lowest prices.
　
Smith said in his book: "Every individual endeavors to employ his capital so that its produce may be of greatest value. He generally neither intends to promote the public interest, nor knows how much he is promoting it. He intends only his own security, only his gain. And he is in this led by an invisible hand to promote that which was no part of his intention. By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote."
　
The "invisible hand" was Smith's name for the economic forces that we today would call supply and demand, Smith agreed with the physiocrats and their policy of "laissez faire", letting individuals and businesses function without interference from government regulation. In that way the "invisible hand" would be free to guide the economy and maximize production."
　
Smith was very critical of monopolies which restricted the competition that he saw as vital for economic prosperity. He recognized that the virtues of the market mechanism are fully realized only when the checks and balances of perfect competition are present. Perfect competition refers to a market in which no firm or consumer is large enough to affect the market price. The invisible hand theory is about economies in which all the markets are perfectly competitive. In such circumstances, markets will produce an efficient allocation of resources, so that an economy is on its production-possibility frontier. When all industries are subject to the checks and balances of perfect competition, markets can produce an efficient bundle of products with the most efficient techniques and using the minimum against amount of inputs. But when monopolies become pervasive, the remarkable efficiency properties of the invisible economic philosophy?
　
39. What is the pith of Adam Smith's economic philosophy?
A. Self-interest is the life-line of economic activities.
B. Government shouldn't intervene in the economy.
C. Competition will benefit the society for consumers' needs are tended.
D. Economic forces should be intended to promote public interest.
正确答案是

40. What does the "invisible hand" refer to?
A. Supply and demand.
B. Laissez faire.
C. Self-interest.
D. Market mechanism.
正确答案是

41. In Smith's view, monopolies ____.
A. will lead the economy to cessation
B. can hardly realize the checks and balances of competition
C. may bring about a vicious circle of high production and low demand
D. both A and B
正确答案是

42. It can be inferred from the text that ____.
A. an efficiency allocation of resources can only be achieved in a free market
B. perfect competition can be realized in a free market
C. self-interest can help to maximize production and minimize inputs
D. both A and B
正确答案是