The ability of the invisible hand to allocate resources efficiently is
A) improved by the existence of barriers to entry.
B) rarely observed in practice.
C) undamaged by the existence of barriers to entry.
D) a fiction of the economist's mind.
E) severely reduced by the presence of barriers to entry.

Question

Quizplus · Accepted Answer

Barriers to entry prevent new firms from entering the market, reducing competition and leading to inefficient resource allocation, thus hindering the invisible hand's ability to function effectively.

The Ability of the Invisible Hand to Allocate Resources Efficiently