One reason we need government, even in a market economy, is that a the invisible hand seldom leads to an efficient allocation of

Question

3 years ago

6

One reason we need government, even in a market economy, is that a the invisible hand seldom leads to an efficient allocation of

resources in any market. b property rights become too entrenched in the absence of government. c the invisible hand, while powerful, is not perfect. d there are insufficient quantities of externalities in the absence of government.

Business

1 answer:

nataly862011 [7] · Answer 1 · 2022-08-14T17:26:36+03:00

Answer:

The correct answer is option c.

Explanation:

The term 'invisible hand' was coined by the economist Adam Smith in his book "Wealth of nations". It refers to the invisible market force that helps the economy to reach the equilibrium.

This invisible force though powerful is not perfect. In some cases, it fails to achieve efficiency which leads to market failure. In such situations, government intervention is necessary to efficiently allocate resources in the economy. So even in a market economy, we need government.