The Ultimate effect of the invisible hand of Adam Smith is that in a competitive economy everyone ?
Correct answer: A. benefits if each acts in his/her own interest
- A. benefits if each acts in his/her own interest
- B. will increase their profits in a free market
- C. should act to maximize economic growth
- D. should act to promote the public interest
Explanation
Smith's invisible hand suggests that, under competition and appropriate institutions, individuals pursuing their own interests can unintentionally promote broader economic welfare. It does not mean that every individual automatically maximises profits or consciously acts for public interest.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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