Adam Smith coined the term "invisible hand" to describe the process by which the actions of independent, self-interested buyers and sellers will:
A. always lead to the most efficient allocation of resources.
B. often lead to increasing inequality.
C. often lead to the most efficient allocation of resources.
D. always lead an economy to ruin.
Answer: C
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All points on the production possibilities frontier
A) are production inefficient. B) achieve allocative efficiency. C) are production efficient but only one point achieves allocative efficiency. D) are allocatively efficient but only one point achieves production efficiency. E) are allocatively inefficient.
Which of the following statements illustrates diminishing marginal utility?
a. An extra dollar of income to a poor person provides that person with more additional utility than does an extra dollar to a rich person. b. An extra dollar of income to a poor person provides that person with less additional utility than does an extra dollar to a rich person. c. An extra dollar of income to a poor person provides that person with the same additional utility as does an extra dollar to a rich person. d. An extra dollar of income to a poor person provides that person with the same total utility as does an extra dollar to a rich person.