The "invisible hand" refers to the:
A)fact that our tax system redistributes income from rich to poor.
B)notion that, under competition, decisions motivated by self-interest promote the social interest.
C)tendency of monopolistic sellers to raise prices above competitive levels.
D)fact that government controls the functioning of the market system.

Question

Quizplus · Accepted Answer

The concept of the "invisible hand" was introduced by economist Adam Smith, who argued that when individuals pursue their own self-interest in a competitive market, they unintentionally promote the overall good of society. In this way, the actions of individuals in pursuit of profit are guided by an "invisible hand" that leads to socially desirable outcomes. This theory is a foundational concept in classical economics.

The "Invisible Hand" Refers to The