What is meant by the phrase ‘invisible hand’?


Solution:Adam Smith coined the expression “invisible hand” in his book “The Wealth of Nations.” He assumed that in a free market system, when everyone is working for his or her personal benefit, an economy may function smoothly. He emphasized that an economy will work and perform better in comparison if the government allows people to freely purchase and sell among themselves. He proposed that if people were free to trade, self-interested traders in the market would compete with one another, causing markets to move in the direction of positive production with the help of an invisible hand.

If someone prices less in a free market setting with no government controls or constraints, the client will buy from that person. As a result, you must drop your price or provide a better service than your opponent. When a sufficient number of people demand something, the market will supply it, and everyone will be satisfied. The buyer will get superior items at the desired price, and the supplier will get the price.

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