BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

Solutions

Chapter
Section
BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

Adam Smith's “invisible hand" refers to

a. the subtle and often hidden methods that businesses use to profit at consumers' expense.

b. the ability of free markets to reach desirable outcomes, despite the self-interest of market participants.

c. the ability of government regulation to benefit consumers, even if the consumers are unaware of the regulations.

d. the way in which producers or consumers in unregulated markets impose costs on innocent bystanders.

To determine
The definition of Adam smith’s “invisible hand”.

Explanation

Option (b):

According to Adam smith, the “invisible hand” can be defined as the ability of the free market to reach desirable outcomes, despite the self-interest of the market participants. Smith is saying that the participants in the economy are motivated by sell-interest and that the “invisible hand” of the marketplace guides this self-interest into promoting general economic well-being. Thus, the option ‘b’ is correct.

Option (a):

The option (a) is a wrong option because Adam smith defines that it is the ability of the free market to reach desirable outcome regardless of the self-interest participation...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

In words, what is put-call parity?

Fundamentals of Financial Management (MindTap Course List)

Describe organizational governance.

Accounting Information Systems

What methods are used?

Foundations of Business (MindTap Course List)

LOCKBOX SYSTEM Hardin-Gchr Corporation (HGC) began operations 5 years ago as a small firm serving customers in ...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)