![]() Therefore, you have to lower your price or offer something better than your competitor. In a free market scenario where there are no regulations or restrictions imposed by the government, if someone charges less, the customer will buy from him. He suggested that if people were allowed to trade freely, self interested traders present in the market would compete with each other, leading markets towards the positive output with the help of an invisible hand. He explained that an economy will comparatively work and function well if the government will leave people alone to buy and sell freely among themselves. He assumed that an economy can work well in a free market scenario where everyone will work for his/her own interest. ![]() Definition: The unobservable market force that helps the demand and supply of goods in a free market to reach equilibrium automatically is the invisible hand.ĭescription: The phrase invisible hand was introduced by Adam Smith in his book 'The Wealth of Nations'. ![]()
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