Principles of Microeconomics, 7th Edition

Published by South-Western College
ISBN 10: 128516590X
ISBN 13: 978-1-28516-590-5

Chapter 1 - Part I - Ten Principles of Economics - Quick Check Multiple Choice: 4


b. the ability of free markets to reach desirable outcomes, despite the self-interest of market participants

Work Step by Step

Adam Smith holds that people are self-motivated but an intangible force (known as the invisible hand) guides this self-motivated activity to promote general economic well-being. In other words, by pursuing their own interests, people tend to make others better off in the economy. For example, when a baker sells bread in order to make money, he makes people who want to purchase bread better off.
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