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…

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter1: Introducing The Economic Way Of Thinking

Section: Chapter Questions

Problem 7SQ

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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.

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