Adam Smith's Invisible Hand Only Leads to an Efficient Outcome

question 38

Multiple Choice

Adam Smith's invisible hand only leads to an efficient outcome when

• A)buyers are fully informed about all relevant aspects of a product and the market in which it is traded.
• B)buyers collect information up to the point at which the marginal cost of having more information equals the marginal benefit of having more information.
• C)buyers have more information about the product being traded than do sellers.
• D)buyers have less information about the product being traded than do sellers.

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Definitions:

Experimenter's Friendly Smile

A variable in psychological experiments that can influence participants' responses, potentially introducing bias.

Cold Demeanor

A behavior characterized by emotional detachment, aloofness, or a lack of warmth in interactions with others.

Single-blind Experiment

A type of experiment where the participants do not know which group (control or experimental) they belong to, but the researchers do.

Experimental Group

A group in a scientific study that is exposed to the variable being tested, in contrast to the control group.