Question

Which one of the following economists has mentioned that invisible hand leads to market equilibrium?

• A. David Ricardo
• B. J.S. Mill
• C. Adam Smith
• D. J.B. Say

Hint:

Remember the famous association: \[ \boxed{\text{Adam Smith} \longleftrightarrow \text{Invisible Hand} \longleftrightarrow \text{Market Equilibrium}} \] This is one of the most frequently asked concepts in economics examinations.

Answer 1

The Correct Option is C

Concept: The concept of the Invisible Hand is one of the fundamental ideas of Classical Economics introduced by Adam Smith. It explains that individuals, while pursuing their own self-interest, unintentionally contribute to the welfare of society. In a competitive market, the forces of demand and supply work together through this “invisible hand” to allocate resources efficiently and achieve market equilibrium without direct government intervention.
• The idea was introduced by Adam Smith.
• It was discussed in his famous book An Inquiry into the Nature and Causes of the Wealth of Nations (1776).
• The invisible hand explains how self-interest can lead to efficient allocation of resources.
• It forms the basis of the free-market economic system.

Step 1: Recall the economist associated with the concept of the Invisible Hand.
The concept was proposed by Adam Smith, who believed that individuals acting in their own economic interest unintentionally promote the overall welfare of society. \[ \boxed{\text{Invisible Hand} \Longrightarrow \text{Self-interest} \Longrightarrow \text{Efficient Resource Allocation} \Longrightarrow \text{Market Equilibrium}} \]

Step 2: Examine the given options.
• David Ricardo -- Known for the Theory of Comparative Advantage and Theory of Rent.
• J.S. Mill -- Contributed to classical economics and utilitarian philosophy.
• Adam Smith -- Introduced the concept of the Invisible Hand.
• J.B. Say -- Known for Say's Law of Markets. Hence, the correct answer is \[ \boxed{\text{(C) Adam Smith}} \]