Question

“If unhampered by external, extraneous interventions, the free-market exchanges among such self-seeking individuals will yield the greatest possible wealth (equated with well-being) for everyone, given their differing contributions to production and desires for consumption.” Do you agree or disagree, explain.

Answer 1

I Agree, this is the concept of invisible hand in the market forwarded by Adam smith, which says that as long as people in the market are looking for self benefit and welfare, the market will remain in the equilibrium and will yeild the greatest possible wealth.

For example, if a seller in the market starts charging a price higher than the equilirium then, people will think of their own benefit and will not buy from those stores, this will bring the price down to the original equilibrium.