. Which statement best characterizes Adam Smith’s concept of the “invisible hand”?
A. Those who don’t work shouldn’t eat.
B. The quest for personal gain works for the common good.
C. When governments fail to regulate, greed conquers all.
D. Markets create money, and money creates demand.
my answer is B
Your answer is correct! Adam Smith's concept of the "invisible hand" is best summarized by statement B: The quest for personal gain works for the common good.
To understand why this statement reflects Adam Smith's concept, it is important to delve into the meaning of the invisible hand. According to Smith, the invisible hand refers to the unintended and positive consequences that result from individuals pursuing their own self-interest in free markets. Although individuals may act with their own well-being in mind, the overall effect is beneficial for society.
To arrive at this conclusion, Adam Smith observed that when individuals seek to maximize their profits or improve their well-being, they are motivated to produce goods or services that others desire and are willing to pay for. As a result, the pursuit of personal gain in a competitive marketplace leads to the creation of wealth and prosperity for society as a whole. This is because market forces, such as supply and demand, guide the allocation of resources efficiently and ensure that goods and services are produced and distributed where they are most needed or desired.
Therefore, under Smith's concept of the invisible hand, the actions of self-interested individuals collectively lead to the common good, as the pursuit of personal gain in free markets generates prosperity and economic growth for the entire society.