PT138.S1.P3.Q17

PrepTest 138 - Section 1 - Passage 3 - Question 17

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P1

David Warsh's book describes a great contradiction inherent in economic theory since 1776, when Adam Smith published . ███ ██████ ██ ████████ █████ █████ ██ ███ ████████ ███████ ███ ███ ███████ ███ ███ █████████ █████

Intro topic · Warsh's book about conflict between Pin Factory and Invisible Hand
Conflict was part of economic theory since Adam Smith's Wealth of Nations.
P2

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Pin Factory · Increased efficiency through increased size
Pin factory's employees can make more by specializing on narrow tasks.
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Invisible Hand · Acting out of self-interest can lead to common good
P3

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Conflict · Increasing returns from scale (Pin factory) leads to monopoly, which means Invisible Hand doesn't work
Invisible Hand requires many competitors in an industry.
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Assumption underlying idea that free markets always get it right · Returns to scale are diminishing, not increasing
This assumption is the opposite of the Pin Factory model.
P4

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Why Pin Factory was de-emphasized · The model of diminishing returns was easier to represent mathematically
The Pin Factory model was more difficult to represent mathematically.
P5

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Pin Factory now mainstream · Once it could be described with enough math rigor, Pin factory entered mainstream
Passage Style
Single position
Spotlight
Show answer
17.

The main purpose of the ██████ █████████ ██ ██

a

critique a theory ██████████ ██ ███████ ███ ████████ ███████ ███ ████████ ███████████

The author doesn’t critique anything in P4; she merely explains why the Pin Factory model was de-emphasized in favor of the Invisible Hand.

1%
b

explain a difficulty ██████████ ████ ████████ █ ██████████ ████████ ██████████

This is the best answer. The author explains why the Pin Factory was de-emphasized by explaining a difficulty associated with modeling the Pin Factory.

72%
c

outline the intuitions ██████████ █ ██████████ ████████ ██████████

The author doesn’t outline the “intuitions” supporting the Invisible Hand. She explains why the Pin Factory was de-emphasized. It’s not clear that economists preference for mathematical rigor is an “intuition” supporting the Invisible Hand.

14%
d

describe the tensions █████████ ████ ████████ ██ █████ ███ █████████ ████████ ███████████

P4 doesn’t describe tensions resulting from modeling the Pin Factory and Invisible Hand. It explains why economists de-emphasized the Pin Factory model in favor of the Invisible Hand.

10%
e

refute an argument ███████ █ ██████████ ████████ ██████████

The author doesn’t refute an argument in P4. She merely explains why economists de-emphasized the Pin Factory model in favor of the Invisible Hand.

2%

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