In Adam Smith's competitive market economy, the question of what goods to produce is determined by the:
A) "invisible hand" of the price system.
B) "invisible hand" of government.
C) "invisible hand" of public interest.
D) "visible hand" of laws and regulations.

Question

Quizplus · Accepted Answer

According to Adam Smith, the "invisible hand" of the price system in a competitive market economy guides producers to produce goods that consumers are willing to pay for. As prices fluctuate based on supply and demand, producers will adjust their production to meet those demands in order to maximize their profits. Therefore, the question of what goods to produce is answered by the invisible hand of the market, rather than the government or public interest.

In Adam Smith's Competitive Market Economy, the Question of What