In the absence of externalities,what can be said about the invisible hand of the marketplace
A)It leads to a market outcome that maximizes total benefit to society.
B)It is unable to resolve inherent disagreements between parties in the market system.
C)It induces people to act in a manner inconsistent with self-interest.
D)It increases the transaction costs so reaching an efficient outcome is especially difficult.

Question

Quizplus · Accepted Answer

The invisible hand of the marketplace refers to the self-regulating nature of the market where each individual pursuing their self-interest results in an efficient allocation of resources and maximizes the total benefit to society. In the absence of externalities, the invisible hand leads to a market outcome that benefits both the buyers and sellers in a mutually beneficial exchange.

In the Absence of Externalities,what Can Be Said About the Invisible