Question

According to Adam Smith’s Invisible Hand Theory involving specialization and division of labor, People specialize where opportunity costs are at a maximum. People specialize where their opportunity costs are lowest. People do not specialize. People specialize in the activity that pays the highest wage. People specialize in the activity that they enjoy the most, no matter what the salary is.

Answer 1

The invisible hand theory of Adam Smith related to specialization and division of labor states that opportunity cost plays an important role in the specialization and division of labor.

A person specialize in that activity which he or she can conduct at lowest opportunity cost.

So,

People specialize where their opportunity costs are lowest.

Hence, the correct answer is the option (2) [People specialize where their opportunity costs are lowest].