Question

Find a concept on your own from Adam Smith that is not on the web page of this course. You need to identify the page and source of where you found this concept. What prompted Adam Smith to develop this idea. How would you use this concept to explain an observation in your life, an historical event, a cultural norm or institution, a local/international problem, create a solution to an environmental issues, or to create a business opportunity.

Answer 1

The concept of Adam Smith is related to the theory of moral sentiments and a very famous theory related to The Invisible hand.

The theory of moral sentiments is related with all the economic matters are related with some of the sentiments like the willingness to purchase a commodity from the side of the consumer also includes something special which day is a question why the consumer is going to purchase only that commodity.

It also includes why the seller decided to produce or sell a particular good.

The Invisible hand concept is related with the concept of the parallel economy where the one economy is productive and another economy also productive but the only difference is that the economy is in the front of everyone but another economy is working effectively and efficiently but from the backside.

Sometimes it is good to run the black economy because the economy fulfils a very important problem of the economy that is called unemployment.

The concept of Adam Smith is related with an historical event when we consider the recession period of 2008 where the NPA is very high and banks are unable to recover the credit from the debtors.

So the concept of moral sentiment is related to when people purchase a commodity with some money and if the person is not able to repay the money to the bank then they try to collect something and to use a productive way to fulfil the things that are not good for the economy.

Another concept is related to the culture known for an institution where it is not backed by the government funding but it acquires something financially backed from the side of the corporate sector so the corporate sector uses their money to Infuse the energy in the cultural norms and institutions and it is again helpful for the economy.

The next concept is related to the local and an international problem. The problem of trading is related and this can only be possible when you have some Liberty in the tax structure and the structure of Expenditure.

The next solution to an environmental issue and it can also be possible with the help of moral sentiments and the concept of invisible hand where the help generation is from the side of Corporate structure or called as CSR corporate social responsibility.

The concept of the invisible hand is also related with the business opportunities where the new dimensions of the business can be possible only with the help of some money that is invested but not related as a loan from the bank at a higher rate.