INSTRUCTIONS
Read/review the following resources for this activity:
Textbook: Chapter 1, 2
Lesson
Minimum of 1 Scholarly source (in addition to the textbook)
Option 1: What assumptions about the economy must be true for the invisible hand to work? To what extent are those assumptions valid in the real world? Do these conditions hold in the social service industries?
Option 2: As illustrated in the text, society must make trade-offs in terms of what society produces. Examine these trade-offs in the context of the production possibilities frontier. Use a social service industry, such as, healthcare as an example. Make sure to address productive efficiency, allocative efficiency, and opportunity costs.
ANSWER
Option 1
The invisible hand is a metaphor introduced by Adam Smith that represents how individuals acting motivated by their self-interest operate in a free market economy where they mutually depend on each other (Paganelli, 2018). It is an unobservable market force in a free market economy that facilitates the demand for goods and services to automatically reach equilibrium. First, for the invisible hand to work, a free-market economy should be…. To access full answer, click on the purchase button below.