/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Q6. What does the "invisible hand" o... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 1: Q6. (page 17)

What does the "invisible hand" of the marketplace do?

Short Answer

Expert verified

The invisible hand leads the market forces to determine the equilibrium price and quantity of a good or service.

Step by step solution

01

Meaning of Invisible Hand

The invisible hand refers to an unobservable force that comes into existence in the case of a perfect competition market.The interaction between sellers and consumers eventually leads to a stable state where the quantity demanded is equal to the quantity supplied. There is no excess demand or supply.

02

Role of Invisible Hand in the marketplace

The invisible hand helps in deciding the price at which the market exchange should occur. This is the price where the willingness of consumers matches the minimum acceptable price of the producers. It maximizes the total surplus and results in allocative and productive efficiency in the marketplace.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

What is the position of households in the goods and service market and in the labor market?

What are the three ways that societies can organize themselves economically?

How are inflation and unemployment related in the short run?

What are the two main causes of market failure? Give an example of each.

Macroeconomics is an aggregate of what happens

at the microeconomic level. Would it be possible for

what happens at the macro level to differ from how

economic agents would react to some stimulus at the

micro level? Hint: Think about the behavior of crowds.
See all solutions

Recommended explanations on Economics Textbooks

Taxation Economics

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.