Adam Smith Coined the Term "Invisible Hand" to Describe the Process

question 44

Multiple Choice

Adam Smith coined the term "invisible hand" to describe the process by which the actions of independent, self-interested buyers and sellers will:

• A)always lead an economy to ruin.
• B)often lead to the most efficient allocation of resources.
• C)always lead to the most efficient allocation of resources.
• D)often lead to increasing inequality.

---

Definitions:

Constant-Cost Industry

An industry where the costs of production do not change as the industry's output changes.

Long-Run Equilibrium

A state in economic theory where all factors of production are fully adjustable, allowing for optimal resource allocation and full competition.

Increasing-Cost Industry

An industry in which production costs increase as the entire market expands production, often due to finite resources.

Long-Run Equilibrium

A state in which all inputs are variable, enabling firms to make adjustments to output and prices to reach a point where no firm desires to change its production or exit the market.