Self-study
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.
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.
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
19.
The reference to
Question Type
Purpose in context (of word, phrase, or idea)
Structure
The author brings up railroads as an example of an industry that fits the Pin Factory model.
a
resolve an ambiguity ████████ ██ ███ ████████ ██ ███ █████████ ████
The author doesn’t discuss an ambiguity in the Invisible Hand and doesn’t bring up railroads in connection with an ambiguity in any concept.
b
illustrate the difficulty ██ ███████ ███ ███████ ██ ███ ███ ███████ ████ ████████████ █████
Railroads aren’t mentioned to show how the Pin Factory is difficult to represent with rigor. They’re mentioned as an example of an industry that fits the Pin Factory model.
c
call attention to ███ ██████████ ██████████ ██ ██████████ ████ ████ ███████████████ ██ ███ ███ ███████
The author isn’t trying to “call attention” to anything. The author is simply telling the story of how the Pin Factory came to be part of the economic mainstream. There’s no indication the author wants to draw our attention to industries that have Pin Factory characteristics. The fact that there are industries with these characteristics is just part of the reason that economist had tried to bring the Pin Factory into mainstream economic thought. Also, ther author never indicates that these industries are becoming increasingly common.
d
point to an ████████ ████ ███████████ ███ ████████████ ██ ███████████ ████████ ██ ███ █████████ ████
This is the best answer. The author brings up railroads as an example of an industry that fits the Pin Factory model. In other words, the author points to an industry that shows why the Invisible Hand model wasn’t a great fit for every industry — there were shortcomings in the emphasis on the Invisible Hand because some industries didn’t fit that model.
e
present an example ██ ███ ████ ██████ ██ ███████████ ████████ ██ ██████████████ ██████████
Increasing returns are