The "invisible hand" concept suggests that:
A)market failures imply the need for a national economic plan.
B)big businesses are inherently more efficient than small businesses.
C)the competitiveness of a capitalistic market economy invariably diminishes over time.
D)given competition, private and public interests will tend to coincide.

Question

Quizplus · Accepted Answer

The "invisible hand" concept, developed by Adam Smith, suggests that in a free market economy, private individuals pursuing their own self-interests will ultimately benefit society. This is because competition will drive prices down and quality up, and businesses will need to meet the demands of consumers in order to make a profit. As a result, private interests (businesses) and public interests (consumers) will tend to coincide. The concept implies that government intervention in the economy may lead to inefficiencies and distortions. Therefore, the correct answer is D - given competition, private and public interests will tend to coincide.

The "Invisible Hand" Concept Suggests That