What does Adam Smith suggest about private investment in domestic industry?

In his seminal work "The Wealth of Nations," Adam Smith discusses the implications of private investment in domestic industries and highlights the importance of efficiency and competition. Smith asserts that while domestic industries have the potential to prosper, they must compete effectively against foreign producers. When foreign goods can be produced more cheaply, domestic industries may struggle to survive without proper conditions or support, potentially leading to inefficiencies.

Option C accurately reflects this idea. Smith recognized that if domestic products are more expensive than imported alternatives, consumers might prefer the cheaper options from abroad, which could inhibit the growth of domestic industries. This notion underscores the importance of global competition and the need for domestic industries to be able to provide value that justifies their higher costs.

Understanding this economic principle is crucial, as it illustrates the balance between supporting local industries and recognizing the benefits of international trade, which Smith believed could lead to overall economic growth.