"He [the producer] intends only his gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." What is the "invisible hand" referred to in this statement?
A) the elasticity of the market demand curve
B) the power of government when decisions are made democratically
C) the guidelines and regulations set for his industry by the government
D) the incentive structure accompanying market prices

Question

Quizplus · Accepted Answer

The "invisible hand" is a metaphor introduced by Adam Smith to describe how individuals pursuing their own self-interest in a free market economy can lead to positive societal outcomes, guided by the incentive structure of market prices.

"He [The Producer] Intends Only His Gain, and He Is