The concept of "the invisible hand" suggests that
A) products are produced out of a seller's sense of charity.
B) when the seller is better off, the buyer is worse off.
C) sellers exploit consumers with high prices.
D) buyers and sellers are self-interested.
E) the command system is the only way of efficiently allocating resources.

Question

Quizplus · Accepted Answer

The concept of "the invisible hand" suggests that buyers and sellers are self-interested, meaning that in a free market, individuals and firms act in ways that benefit themselves, ultimately leading to an efficient allocation of resources. This is the opposite of options A, B, and C, which suggest that either sellers are charitable or exploit consumers, or that buyers are worse off when sellers are better off. Option E is also incorrect as it suggests that only a command system can efficiently allocate resources, whereas the invisible hand suggests that a free market can also efficiently allocate resources.

The Concept of "The Invisible Hand" Suggests That