The Concept of "The Invisible Hand" Suggests That to Attain

question 12

Multiple Choice

The concept of "the invisible hand" suggests that to attain efficiency,the government should

• A) guide economic activity.
• B) set prices.
• C) leave prices and output decisions to the competitive market.
• D) regulate all production decisions, but not price decisions.
• E) make sure that a command system is used to allocate resources.

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Definitions:

Total Spending

The aggregate amount of money spent by consumers, businesses, and the government in an economy over a specific period.

Inelastic

Characterizes a condition where a change in price leads to a relatively small change in the quantity demanded or supplied.

Price Elasticity of Demand

The responsiveness of the quantity demanded of a good to a change in its price, with all other factors being held constant.

Elastic

Describes a situation where the demand for a product significantly changes in response to changes in its price.