The Invisible Hand Principle Indicates That Competitive Markets Can Help

question 135

Multiple Choice

The invisible hand principle indicates that competitive markets can help promote the efficient use of resources

• A) only if buyers and sellers really care, personally, about economic efficiency.
• B) even when each market participant cares only about their own self interest rather than about the overall efficiency of resource use.
• C) even if business firms fail to produce goods efficiently.
• D) if, and only if, businesses recognize their social obligation to keep costs low and use resources wisely.

---

Definitions:

Free Trade

The absence of tariffs, duties, and other governmental barriers to international trade, allowing goods and services to move more freely across borders.

Soybeans

A species of legume native to East Asia, widely grown for its edible bean which has numerous uses in food, oils, and as a source of protein.

Domestic Price

The price of goods or services within a country's borders, unaffected by international trade factors.

World Price

The international market price at which goods, services, or commodities are bought and sold across countries.