ECONOMICS
ECONOMIC SYSTEMS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The self-regulating nature of the market place
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Self-interest motivating the market place
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Competition being the regulating force in the market place
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The equal distribution of wealth
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Detailed explanation-1: -Definition: The unobservable market force that helps the demand and supply of goods in a free market to reach equilibrium automatically is the invisible hand. Description: The phrase invisible hand was introduced by Adam Smith in his book ‘The Wealth of Nations’.
Detailed explanation-2: -The invisible hand is a metaphor for the unseen forces that move the free market economy. Through individual self-interest and freedom of production and consumption, the best interest of society, as a whole, are fulfilled.
Detailed explanation-3: -What is an example of the invisible hand? To increase market share, a manufacturer might provide a higher-quality product at a lower price than its competitors. Maintaining low pricing may generate demand and foster competition among companies selling comparable items.
Detailed explanation-4: -Answer and Explanation: d. Market power is the instrument with which the invisible hand directs economic activity.