Adam Smith's “invisible hand” concept describes how corporate business reaches into the pockets of consumers like an “invisible hand.”

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In this statement, we’re asked to assess whether Smith's metaphor of the 'invisible hand' depicts corporate business reaching into consumers' pockets like an invisible hand.
Option 1: 'True' – Interpreting the phrase as a literal, physical intervention by businesses into consumers’ finances is a misreading. The invisible hand is a theoretical concept about how free markets allocate resources efficiently through individuals pursuing their own interests, not about a literal hand reaching into wallets.
Option 2: 'False' – This aligns with the standard economic interpretation. The invisible hand describes emergent market outcomes, such as price signals and resource allocation, arising from voluntary exchange and competition, not direct coercion or concealment by corporations collecting money from consumers. It emphasizes mechanism over manipulation.
A helpful way to distinguish them is to recall that the metaphor refers to spontaneous order in markets, whereas a literal hand would imply intentional coercion or physical control, which is not what Smith described.
Option 2 is the accurate stance because the concept does not describe a corporation skimming funds, but rather how prices and incentives guide behavior within competitive markets.

252_EC201 25_2 ECO201 Quiz 1 (Tuesday Group)

Adam Smith's “invisible hand” concept describes how corporate business reaches into the pockets of consumers like an “invisible hand.”

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