Question

What did Adam Smith mean when he talked of an invisible hand that guides the production...

What did Adam Smith mean when he talked of an invisible hand that guides the production in market economies

Homework Answers

Answer #1

Adam Smith in his book 'The Wealth of Nations' introduced the concept of the invisible hand. The invisible hand phrase refers to the unobservable forces in the market that contributes to the demand and supply of products in a free market on reaching automatically to the equilibrium; and therefore in the market economies helps to guides the production. The invisible hand is a specification of the concept that if everyone in an economy works in a perfectly competitive market on the advancement of their self-interest, and firms maximizing their profit, everyone in market economies will attain economic gains as well as the advancement.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
What is the definition of the invisible hand for Adam Smith?
What is the definition of the invisible hand for Adam Smith?
Explain in depth what Adam Smith meant when he said that the market operates as if...
Explain in depth what Adam Smith meant when he said that the market operates as if “an invisible hand” is guiding the process.
1.Which of the following is not required for the “invisible hand” described by Adam Smith to...
1.Which of the following is not required for the “invisible hand” described by Adam Smith to benefit society? A.Both parties to a transaction must be rational and well informed. B.Both parties to a transaction must care about each other, and want to make the other person happy. C.Property rights must be well defined. D.Property rights must be clear and enforced by law. 2.George Akerloff focused the market for used cars and discussed an issue later generally called the “lemons problem.”...
If the economy runs most efficiently when left on its own (Adam Smith's invisible hand), then...
If the economy runs most efficiently when left on its own (Adam Smith's invisible hand), then why do we need government involvement? Do you think government should be so heavily involved in our economy?
True or false and WHY? What Adam Smith detested about mercantilism was its focus on the...
True or false and WHY? What Adam Smith detested about mercantilism was its focus on the founding and defense of the nation state. True or false and WHY? Adam Smith, between the 1759 publication of The Theory of Moral Sentiments and the 1776 publication of An Inquiry Into the Nature and Causes of the Wealth of Nations, changed his mind about how the commercial world works. The following statement by the chairman of General Motors:   “What’s good for GM is...
3. One of the content guides talked about mean, median and mode. Find the mean and...
3. One of the content guides talked about mean, median and mode. Find the mean and median of the following data set of house values in a neighborhood: $25,000, $50,000, $60,000, $180,000, $100,000, $130,000, $170,000, $200,000, $125,000, $240,000, $190,000, $1,000,000. What is a more informative measure of the average prices of homes on this street? Why?
What does Adam Smith mean by wealth? Why is this so significant?
What does Adam Smith mean by wealth? Why is this so significant?
When describing "the invisible hand" of the market, summarize two assumptions of free markets and then...
When describing "the invisible hand" of the market, summarize two assumptions of free markets and then give an example of a real-life market, business, or transaction that violates each of these assumptions.
The basic idea of Adam Smith’s “invisible hand” is that: Dire poverty and income inequalities are...
The basic idea of Adam Smith’s “invisible hand” is that: Dire poverty and income inequalities are inevitably a part of a free market. The pursuit of private interests by individuals and firms can lead to socially desirable ends. There is a force inherent in government with seeks to achieve social usefulness. Population increase is an important determinant of a country’s development. A free, competitive economy cannot allocate resources efficiently without government planning. The purpose of an economic model is to:...
What is neoclassical economics and when did the term begin to be used? What is the...
What is neoclassical economics and when did the term begin to be used? What is the invisible hand? What does it mean to say that markets are self-regulating? What is the economic meaning of the phrase 'laissez-faire'?