How Does the Invisible Hand Ensure That an Economy Will

question 51

Multiple Choice

How does the invisible hand ensure that an economy will not run out of a renewable resource?

• A) As resources run low, consumers will naturally decrease their demand for those resources.
• B) Government will begin to regulate scarce resources as an effective means of rationing those resources.
• C) If there is demand for those resources, producers will continue increasing supply regardless of price.
• D) Price increases due to the diminishing supply of a resource will both curb consumption and provide incentive for producers to expand supply.

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Definitions:

Base-Rate Information

Base-rate information refers to the statistical likelihood of an event or characteristic within a given population, used in decision-making processes.

Stroop Effect

A demonstration of cognitive interference where the brain's reaction time slows down when processing conflicting information, such as reading the word "green" printed in red color.

Algorithms

Procedures or formulas for solving problems, often used in mathematics and computer science to perform specific tasks or calculations.

Overconfident

A psychological state characterized by an individual's unwarranted belief in their own abilities or the accuracy of their knowledge, often leading to risk-taking behaviors.