When economists refer to "the invisible hand," what do they mean?
What will be an ideal response?
In his book, Wealth of Nations, Adam Smith wrote that a participant in a competitive market is "led by an invisible hand to promote an end which was no part of his intention." Market participants act in their own self-interest, attempting to maximize their own well-being, yet, in the process, the result is an efficient use of resources. This result occurs because the market forces of supply and demand invisibly guide resources to their highest valued uses.
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How would you best describe a manufacturing employee who has been fired because he was replaced by a robot (new technology) and does not have the skills necessary to help operate the robot?
A) job leaver B) entrant/reentrant C) cyclically unemployed D) structurally unemployed
All else constant, a large decrease in the number of people who want to own sport utility vehicles (SUVs) because of their poor fuel efficiency could be expected to cause:
A) an increase in the supply of SUVs. B) a decrease in the equilibrium price of gasoline. C) an increase in the equilibrium price of SUVs. D) an increase in the supply of gasoline.