Question

Which of the following books explained that rational self-interest in a free- market economy leads to economic well-being?

• A. The Division of Labour in Society
• B. The Market Wheel
• C. The Wealth of Nations
• D. Rulers, Townsmen and Bazaars; North Indian Society in the Age of British Expansion

Answer 1

The Correct Option is C

The book that explained how rational self-interest in a free-market economy leads to economic well-being is "The Wealth of Nations." This pivotal work was authored by Adam Smith, a philosopher and economist who is often regarded as the father of modern economics.

In "The Wealth of Nations," Smith introduced the concept of the "invisible hand," illustrating how individuals pursuing their own self-interest inadvertently contribute to the overall good of society. His ideas laid the foundation for classical economics and emphasized the benefits of free markets, competition, and the division of labor in promoting economic prosperity.

Thus, the correct answer to the question is: "The Wealth of Nations."

Answer 2

"The Wealth of Nations" is a seminal work by Adam Smith, first published in 1776. In this book, Smith explains how individuals acting in their own rational self-interest in a free-market economy can lead to economic prosperity for society as a whole. This idea is famously captured in the concept of the invisible hand, where the pursuit of individual gain results in the overall economic well-being of society.

• The Division of Labour in Society (Option A): This is a work by Émile Durkheim, a sociologist, and is not focused on economic self-interest or free markets.
• The Market Wheel (Option B): This is not a well-known work in economics.
• Rulers, Townsmen and Bazaars: North Indian Society in the Age of British Expansion (Option D): This book by C.A. Bayly discusses Indian society during British rule, not the principles of free-market economics.

Therefore, "The Wealth of Nations" is the correct answer.