Question

What is the concept of the invisible hand introduced by Adam Smith?

1) A metaphor used to describe the mechanisms through which beneficial social and economic outcomes may arise from the self-interested actions of individuals
2) A physical hand that guides individuals to make self-interested actions
3) A concept introduced by a 19th-century philosopher
4) A concept that intends to bring about social and economic outcomes

Answer 1

The concept of the invisible hand, introduced by Adam Smith, suggests that self-interested actions of individuals can lead to beneficial social and economic outcomes. It explains how pursuing one's own self-interests in a market economy can result in positive outcomes for society as a whole.

Step-by-step explanation:

The concept of the invisible hand, introduced by Adam Smith, is a metaphor used to describe the mechanisms through which beneficial social and economic outcomes may arise from the self-interested actions of individuals. It suggests that when individuals pursue their own self-interests in a market economy, the cumulative effect of their actions can lead to positive outcomes for society as a whole. For example, when people work hard to make a living, they contribute to the creation of economic output, and consumers who seek the best deals encourage businesses to offer goods and services that meet their needs.