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The Chicago School of economics gained ascendancy in the 1950s and became the prevailing way of thinking about capitalist economics, first in the United States and eventually in many Western countries. A dominant subset of “Neoclassical economics,” the Chicago School fine-tuned many of the fundamentals of the larger movement and articulated tenets now generally taken for granted in economic thought.
A basic principle of Neoclassical economics is the concept of utility, or the assertion that a correct economic decision is one that yields “the greatest good for the greatest number.” Neoclassical economics vociferously defends a laissez-faire, or “hands off,” approach to government regulation. According to Neoclassical theory, in the absence of state interference, individual participants in the market will make rational economic decisions that maximize their satisfaction. For individuals, the principle of utility translates into buying quality goods at the lowest possible price; for companies, it means making decisions that will maximize profits.The interplay of free market forces, according to Neoclassical economists, will result in greater good – in the form of high quality products and services – for a greater number of people.
The Chicago School accepts the principles of utility and laissez-faire regulation, but tailors its understanding of these terms to focus on the related principle of “efficiency.” For Chicago School thinkers, “efficiency” subsumes Neoclassical thought on the mechanisms of utility, which concentrates on individuals making individual rational decisions, into a more sophisticated awareness of the balance between individual decisions and production. The chief cause of inefficiency for Chicago School thinkers is government regulation, which prevents the free interplay of market forces. In an economy unencumbered by state interference, not only are individuals and companies free to maximize their satisfaction, but production itself is likely to become more efficient by producing the highest quality goods at the lowest possible price.
According to the passage, all of the following are benefits of a laissez-faire economy EXCEPT
A. Individual participants will make decisions that maximize their satisfaction.
B. Companies will make decisions that maximize their profits.
C. Production of goods will become more efficient.
D. Government agencies will be available to correct inflation.
E. Quality goods will be produced at the lowest possible price.
A basic principle of Neoclassical economics is the concept of utility, or the assertion that a correct economic decision is one that yields “the greatest good for the greatest number.” Neoclassical economics vociferously defends a laissez-faire, or “hands off,” approach to government regulation. According to Neoclassical theory, in the absence of state interference, individual participants in the market will make rational economic decisions that maximize their satisfaction. For individuals, the principle of utility translates into buying quality goods at the lowest possible price; for companies, it means making decisions that will maximize profits.The interplay of free market forces, according to Neoclassical economists, will result in greater good – in the form of high quality products and services – for a greater number of people.
The Chicago School accepts the principles of utility and laissez-faire regulation, but tailors its understanding of these terms to focus on the related principle of “efficiency.” For Chicago School thinkers, “efficiency” subsumes Neoclassical thought on the mechanisms of utility, which concentrates on individuals making individual rational decisions, into a more sophisticated awareness of the balance between individual decisions and production. The chief cause of inefficiency for Chicago School thinkers is government regulation, which prevents the free interplay of market forces. In an economy unencumbered by state interference, not only are individuals and companies free to maximize their satisfaction, but production itself is likely to become more efficient by producing the highest quality goods at the lowest possible price.
According to the passage, all of the following are benefits of a laissez-faire economy EXCEPT
A. Individual participants will make decisions that maximize their satisfaction.
B. Companies will make decisions that maximize their profits.
C. Production of goods will become more efficient.
D. Government agencies will be available to correct inflation.
E. Quality goods will be produced at the lowest possible price.
07 Aug 2026, 09:28
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Explanation
The words according to the passage in the question stem indicate that the correct answer can be chosen by reviewing details from the passage. Go through each answer choice and confirm that it can be supported by a specific line in the passage. The one that IS NOT supported by the passage is the correct answer.
A. These lines discuss how individuals will maximize their satisfaction.
B. There is an indication that companies will maximize their profits.
C. This passage discusses efficient production of goods.
D. Correct. The passage states explicitly that a laissez-faire economy means little interference from government.
E. There is a discussion of the production of quality goods at a low price.
The correct answer is D
The words according to the passage in the question stem indicate that the correct answer can be chosen by reviewing details from the passage. Go through each answer choice and confirm that it can be supported by a specific line in the passage. The one that IS NOT supported by the passage is the correct answer.
A. These lines discuss how individuals will maximize their satisfaction.
B. There is an indication that companies will maximize their profits.
C. This passage discusses efficient production of goods.
D. Correct. The passage states explicitly that a laissez-faire economy means little interference from government.
E. There is a discussion of the production of quality goods at a low price.
The correct answer is D
