Thanks for the question! So we’re asked to figure out what a reference to railroad sin line 51 is doing, so we go to those lines and read around them to get the full context.
We’re told here that a lot of economists tried to bring the Pin Factory into mainstream economic thought to reflect the fact that increasing returns obviously characterize a lot of enterprises, such as railroads. So clearly, railroads here are being brought up as some kind of example which increasing returns applies to. But we’re not actually told that the prevalence of such industries itself is actually increasing, which is why we can get rid of (C).
(D), on the other hand, says that mentioning railroads points to an industry that illustrates the shortcomings of emphasizing the Invisible Hand. What are these shortcomings of emphasizing the Invisible Hand? Well, if we take a look at the beginning of the paragraph starting at the line 20, we’re told about how the concepts of the invisible hand and the pin factory are opposed to each other. And we’re told that one of the shortcomings of emphasizing the invisible hand is that this assumes that returns to scale are diminishing. And so railroads, which have increasing returns to scale, are an example of an industry that shows the invisible hand’s shortcomings, and so (D) is the correct answer.
Hope this helps! Feel free to ask any other questions that you might have.
avifon June 18, 2020
Doesn't it say in the line before: Many economists tried repeatedly to bring the
Pin Factory into the mainstream of economic thought
(50) to reflect the fact that increasing returns obviously
characterized , such as railroads.
Victoriaon June 26, 2020
Hi @avif,
It does state this; however, the reason that economists failed to bring the Pin Factory into the mainstream of economic thought was that the idea is both hard to represent mathematically and difficult to state in a rigorous fashion.
The reference to railroads in line 51 is intended to provide an example of an industry that fits the Pin Factory model. We know from the third paragraph that the Invisible Hand and the Pin Factory are opposed to each other.
The fact that many enterprises, including railroads, are obviously characterized by increasing returns (i.e. the Pin Factory) illustrates that economists choosing to emphasize the Invisible Hand results in shortcomings. Why? Because an emphasis on the Invisible Hand (a theory which contradicts the Pin Factory) overlooks these many enterprises which are characterized by the Pin Factory.
Hope this helps! Please let us know if you have any further questions.
avifon June 28, 2020
I guess it does. Thanks.
Jazminon April 20, 2022
I'm confused because when I took this test it seems as if there's another test that the tutors are using, which reverse answer choice C & D. Shunhe said "But we’re not actually told that the prevalence of such industries itself is actually increasing, which is why we can get rid of (C)." but this explanation he provided refutes answer choice D, not C. Please tell me if there was a mistake because my answer choice C states "C: illustrate the difficulty of stating the concept of the Pin Factory with mathematical rigor", while D states "D: call attention to the increasing prevalence of industries that have characteristics of the Pin Factory". Victoria's explanation also justifies C as the right choice as well. I'm just looking for clarity on which words are the right answer choice.
Emil-Kunkinon May 9, 2022
Hi,
My (C) is: call attention to the increasing prevalence of industries that have characteristics of the pin factory.
My answer choice (D) is: Point to an industry that illustrates the shortcomings of economists emphasis on the invisible hand.
I double-checked in lawhub, so it looks like the correct (C) is call attention, and the correct (D) is point to an industry
