1. From the basic economic principles, explain the concept of the “Invisible Hand” - its origins - and how it affects environmental economics. 16 marks
Added by Pamela R.
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It describes the self-regulating nature of a free market economy, where individuals pursuing their own self-interest inadvertently contribute to the overall economic well-being of society. This occurs as individuals make decisions based on personal gain, leading Show more…
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Setting aside the question of liberty rights and capital exchange, the metaphor of the invisible hand has often been used to suggest that unregulated market forces will, as a matter of fact, maximize social utility. The pursuit of gain for gain's sake (the profit motive) balanced by the pressure of free market competition, according to this view, provides the optimal mechanism for efficient production and distribution of social goods. It is not often noted, however, that this is an empirical claim. That is to say, whether or not it is true depends on whether or not it is borne out by how the world turns out. Your task this week is to make an initial post that both outlines the position of the invisible hand and offers a factual challenge to it's truth and a second post that critically responds to at least one other posting.
Jennifer S.
Does Adam Smith's "invisible hand" also function in traditional and command economies? Explain your answer.
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