Define "invisible hand" in economics.

• A. A term related to government intervention in the economy
• B. A concept that leads to increased regulation of businesses
• C. A metaphor describing self-interest leading to economic prosperity
• D. An argument for monopolistic practices in business

Answer: (C)

The term "invisible hand" in economics, attributed to Adam Smith, represents the idea that individuals, while pursuing their own self-interests, inadvertently contribute to the overall economic well-being of society. This metaphor illustrates how personal motivations can lead to beneficial outcomes for the collective, as individuals making independent choices in a free market can stimulate production, enhance resource allocation, and foster innovation.

By acting on their own interests, individuals help to create a more efficient and dynamically responsive economy. This self-regulating nature of the market allows for supply and demand to balance naturally, thereby contributing to economic prosperity without the need for central planning or government intervention. Thus, the concept encapsulates the fundamental belief in the efficacy of free market systems and the idea that individual pursuits can create collective benefits.