Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?

• A. The division of labor increases productivity and efficiency.
• B. Trade barriers are essential for economic growth.
• C. Monopolies are the most efficient market structure.
• D. Government intervention is always necessary to correct market failures.

Answer: (A)

Verified step by step guidance

1. Understand the context of Adam Smith's book 'The Wealth of Nations', which is a foundational text in economics focusing on how economies grow and function.
2. Recall that Adam Smith is most famous for introducing the concept of the division of labor, which explains how breaking down production into specialized tasks can increase productivity and efficiency.
3. Recognize that the other options, such as trade barriers, monopolies being most efficient, and always needing government intervention, do not align with Smith's key observations in this work.
4. Identify that the correct observation attributed to Adam Smith is that 'The division of labor increases productivity and efficiency.'
5. Summarize that this concept highlights how specialization allows workers to become more skilled at their tasks, leading to greater output and economic growth.