ECONOMICS
ECONOMIC SYSTEMS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Interaction between buyers and sellers
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The opposite of self interest
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The development of the division of labor
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The self-regulating nature of the market
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Detailed explanation-1: -invisible hand, metaphor, introduced by the 18th-century Scottish philosopher and economist Adam Smith, that characterizes the mechanisms through which beneficial social and economic outcomes may arise from the accumulated self-interested actions of individuals, none of whom intends to bring about such outcomes.
Detailed explanation-2: -Which best describes the idea behind the “invisible hand"? Individuals seeking their own self interest benefit the economy as a whole.
Detailed explanation-3: -The term “invisible hand” first appeared in Adam Smith’s famous work, The Wealth of Nations, to describe how free markets can incentivize individuals, acting in their own self-interest, to produce what is societally necessary.
Detailed explanation-4: -Answer and Explanation: d. Market power is the instrument with which the invisible hand directs economic activity.
Detailed explanation-5: -Self-regulating markets: classical theorists believed that free markets regulate themselves when they are free of any intervention. Adam Smith referred to the market’s ability to self-regulate as the “invisible hand” because markets move towards their natural equilibrium without outside intervention.