Question

In: Economics

In his concept of “the invisible hand,” Adam Smith explains that a. traditional religion is an...

In his concept of “the invisible hand,” Adam Smith explains that

a.

traditional religion is an appropriate guide for human behavior.
b.

governmental rule actually results in greater good than is apparent at the time.
c.

All of the responses are correct.
d.

the pursuit of self-interest promotes economic well-being for society as a whole.
e.

if each person looks out for himself or herself, then chaos will inevitably ensue.

Solutions

Expert Solution

Ans: Option d: he pursuit of self-interest promotes economic well-being for society as a whole.

Explanation:

In his book "The Wealth of Nations" Smith introduced the concept of "The Invisible hand". Here Smith promotes a free market economy where everyone will be free to choose. According to him if govt. leave people alone to buy and sell in market then the price system (according to him this Price system is the invisible hand) equate market demand and market supply. Thus the economy will work efficiently. He suggests that if everyone in the economy is free to pursuit his/her own self-interest the whole economy will be better-off.

Rahul Sunny answered 2 years ago
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