The invisible hand enforces the tendency toward
A)MR = MU.
B)MC = P = MU.
C)MC = MPP = P.
D)MRP = MPP = P.

Question

Quizplus · Accepted Answer

The invisible hand refers to the market forces that guide the economy towards an equilibrium. In a perfectly competitive market, firms will produce where MC = P to maximize profits, while consumers will purchase up to the point where their marginal utility (MU) equals the price (P). This results in an efficient allocation of resources where the social surplus is maximized. Therefore, the invisible hand enforces the tendency towards MC = P = MU.

The Invisible Hand Enforces the Tendency Toward