--%>

Guardian implies that there really is an invisible hand

Evaluate and explain the statements: “Market is its own guardian implies that there really is an invisible hand or taskmaster that watches over the decision makers in the marketplace”

E

Expert

Verified

The statement that the market is its own guardian implies that there really is an invisible hand or taskmaster that watches over the decision makers in the marketplace.  In a pure capitalist system where free markets exist, freedom of enterprise and freedom of choice exist.  However, if one chooses to produce that which the consumer does not want, or at least doesn’t want enough to cover the cost of the scarce resources employed, the producer-entrepreneur will find this freedom of enterprise limited by the decisions of consumers in the marketplace.  On the demand side, consumer choice is limited by the prices of commodities which consumer wants and the consumer’s income i.e. limited by value that the consumer’s own resources can earn in resource markets.

   Related Questions in Business Economics

  • Q : Good economic policy requires good

    Explain the statement: “Good economic policy requires good economic theory.”?

  • Q : Allocating resources and distribute

    The market system tends to mainly beneficial allocating resources and distributes goods while: (1) the distributions of wealth and resource ownership are extensively perceived as equitable. (2) markets are extremely competitive. (3) goods are rival an

  • Q : Adopting policy of paying efficiency

    The expected losses to workers by shirking are increased while a firm adopts a policy of: (1) dividing productive tasks therefore the division of labor is optimal. (2) paying efficiency wages that exceed market-clearing wages. (3) avoiding legal liability from not wri

  • Q : Tax revenues to reduce rate of inflation

    Explain how government might manipulate its expenditures and tax revenues to reduce rate of inflation?

  • Q : High-convexity portfolios outperform

    An important drawback of "traditional yield spread analysis" is the "failure to take into account future interest rate volatility that would affect the expected cash flow" of a fixed income security. How does option adjusted spread analysis correct for the "failure" of traditional yield spread analy

  • Q : Interrelationships between economic

    Explain in detail the interrelationships between economic facts, theory, and policy.  Critically evaluate this statement:  “The trouble with economic theory is that it is not practical.  It is detached from the real world.”

  • Q : Describe what do you mean by European

    Describe what do you mean by European Union (EU)?

  • Q : What 2 points are required to emphasis

    What 2 points are required to emphasis foreign exchange market?

  • Q : Example of simultaneous changes in both

    Elucidate an example of simultaneous changes in both supply and demand?

  • Q : Illustrate other than price many factors

    Illustrate other than price many factors determine the outcome?