Economists found that they had to look further than Adam Smith’s view. Which reason does NCERT call the most important one?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → In many situations society decided to pursue certain important social goals unselfishly
Economists found three reasons to look beyond Smith. The third, and the most important, is that society decided to pursue social goals unselfishly.
Option (1) In many markets, the prices of different goods stopped moving together — Incorrect. In fact, prices, wages and profits of different goods generally move together.
Option (2) In some cases, the markets existed but failed to produce equilibrium of demand and supply — Incorrect. This is the second reason, not the most important one.
Option (3) In some cases, the markets did not or could not exist — Incorrect. This is the first reason.
Option (4) In many situations society decided to pursue certain important social goals unselfishly — Correct. Social goals in employment, defence, education and health are called the most important reason.
NCERT (2026-27): “Introduction … Adam Smith, the founding father of modern economics, had suggested that if the buyers and sellers in each market take their decisions following only their own self-interest, economists will not need to think of the wealth and welfare of the country as a whole separately. But economists gradually discovered that they had to look further. Economists found that first, in some cases, the markets did not or could not exist. Secondly, in some other cases, the markets existed but failed to produce equilibrium of demand and supply. Thirdly, and most importantly, in a large number of situations society (or the State, or the people as a whole) had decided to pursue certain important social goals unselfishly (in areas like employment, administration, defence, education and health) for which some of the aggregate effects of the microeconomic decisions made by the individual economic agents needed to be modified. …” |