Question

``Supply creates its own demand." This statement is given by

• A. Ricardo
• B. J.S. Mill
• C. J.B. Say
• D. A.C. Pigou

Hint:

Say's Law is a fundamental concept in classical economics, which assumes that markets will naturally self-regulate and tend towards full employment. It was famously challenged by John Maynard Keynes during the Great Depression.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
This question asks to identify the economist associated with the famous classical economic proposition that "supply creates its own demand." This principle is a cornerstone of classical economics.

Step 2: Detailed Explanation:
The statement "supply creates its own demand" is the essence of Say's Law of Markets.
\begin{itemize} \item Jean-Baptiste Say (J.B. Say) was a French classical economist who argued that the production of goods (supply) generates an equivalent amount of income (wages, profits, rent) for the producers. This income is then used to purchase other goods (demand).
\item In his view, a general glut or overproduction across the entire economy was impossible because the act of producing goods itself creates the purchasing power needed to buy those goods.
\item The other economists listed are also prominent figures, but are known for different contributions: \begin{itemize} \item David Ricardo: Known for the theory of comparative advantage and the labor theory of value. \item John Stuart Mill (J.S. Mill): A key classical liberal thinker who expanded on the ideas of Ricardo and Adam Smith. \item Arthur Cecil Pigou (A.C. Pigou): Known for his work in welfare economics, particularly the concept of externalities and Pigouvian taxes. \end{itemize} \end{itemize}

Step 3: Final Answer:
The statement is given by J.B. Say.