The "invisible hand" refers to the notion that
A) competitive markets send resources to their highest valued uses.
B) government intervention is necessary to ensure efficiency.
C) marginal benefit decreases as more is consumed.
D) marginal cost increases as more is produced.
E) no matter what allocation method is used, the resulting production is efficient.

Question

Quizplus · Accepted Answer

The "invisible hand" is a term coined by Adam Smith to describe the self-regulating behavior of markets. It refers to the idea that in a competitive market economy, individuals pursuing their own self-interest will unintentionally promote the general wellbeing of society. This is because the price mechanism of the market will allocate resources to their most highly valued use, resulting in efficient production and distribution of goods and services.

The "Invisible Hand" Refers to the Notion That