When Adam Smith talked about “the invisible hand” he argued that: High transaction costs normally prevent markets from achieving equilibrium.Prices, in the long run, end up where both fairness and efficiency are achieved.Changing prices leads to an “end” which buyers and sellers are not totally pleased with, but one that is efficient.Create mutually agreed upon prices over time if the market is subsidized. As prices increase, demand falls, but supply rises, creating an equilibrium outcome.Self-interested activities help eliminate shortages and surpluses if price ceilings and price floors are effectively utilized.

Adam Smith's concept of the invisible hand suggests that the pursuit of self-interest by way of…

Answered: When Adam Smith talked about “the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Concept explainers

Question

When Adam Smith talked about “the invisible hand” he argued that:

High transaction costs normally prevent markets from achieving equilibrium.
Prices, in the long run, end up where both fairness and efficiency are achieved.
Changing prices leads to an “end” which buyers and sellers are not totally pleased with, but one that is efficient.
Create mutually agreed upon prices over time if the market is subsidized.
As prices increase, demand falls, but supply rises, creating an equilibrium outcome.
Self-interested activities help eliminate shortages and surpluses if price ceilings and price floors are effectively utilized.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions