
Example
If the supply of one vegetable goes up, suppliers may decrease their prices to clear this supply. Consumers may react by substituting one vegetable for another to take advantage of the lower price. This ensures efficient markets where vegetables are less likely to go to waste.Overview: Invisible Hand | ||
Function | ||
Definition | Individual actions collectively act like an invisible hand moving the global economy in one direction or another. | |
Value | The concept of the invisible hand can be used to argue for economic systems that give individuals strong incentives. In other words, putting the right incentives in place has a dramatic effect at the macro level. |