What was the invisible hand theory proposed by adam smith?
Answers
Adam Smith in his book Wealth of the Nations uses the term invisible hands as a natural mechanism that exists in a free market and keeps the demand supply in equilibrium.
Free market is a term which is given to any market where good and services are traded and price is set on the basis of demand and supply with no intervention from govt. Therefore, invisible hands are referred as a phenomenon of demand and supply that keeps the price at equilibrium level.
The theory of Invisible Hand was given by Adam Smith in his well-acclaimed composition, "Wealth of Nations".
According to him, a certain invisible hand controls the economy in a free market economic condition and profit maximization can be possible then.
His theory is always used to analyse the economic condition of a certain place.