What is the invisible hand principle? Does it indicate that self-interested behavior within markets will result in actions that are beneficial to others? What conditions are necessary for the invisible hand to work well? Why are those conditions important?

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Tod ThielLv2

28 Apr 2018

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Related questions

Determine if the statements below are true or false and label each accordingly

A. The invisible hand leads to firms charging a price that is equal to marginal cost in both competitive and non-competitive markets.

B. In order for the invisible hand to work, prices have to be accurate signals.

C. The invisible hand principle is that self-interest is often aligned with social interest.

D. The invisible hand principle works particularly well for goods associated with externalities.

E. The invisible hand suggests that the government should play an active role in deciding what goods and services should be produced

silverwhale269

Answer for the question should be written in no more than 400 words but no less than 300 words.

Adam Smith, the father of modern economics, argued that the private pursuit of self-interest would lead, as if by an invisible hand, the well-being of all.

Answer to this Question: Do you think it really works well in our real markets? Please present your own thoughts in association with the notion of 'the level playing field.' Please include your analysis on what may bring a non-level-playing field to the economic field? and what may be the remedial measure for that?.

goldgnu396

The following is the payoff matrix for a prisoner's dilemma.

PRISONER'S DILEMMA		Player B
PRISONER'S DILEMMA		Confess	Deny
Player A	Confess	-3, -3	0, -6
Player A	Deny	-6, 0	-1, -1

a. What is a dominant strategy?
b. Is there a dominant strategy?
c. What is a Nash Equilibrium?
d. Is there a Nash equilibrium?
e. What does this mean for Adam Smith%u2019s claim that the pursuit of self-interest by individuals who are guided by the Invisible Hand of the market will result in optimal outcomes?