(Solution) ECON312N Week 1 Discussion: Scarcity or the Invisible Hand


 ECON312N Principles of Economics

Select and respond to one of the following options:

  • 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.


Scarcity or the Invisible Hand

Option 1

The invisible hand theory by Adam Smith assumes that people are rational. When people operating in an economy are rational, they are sensible and make decisions after considering intelligent thinking and not emotions. Another assumption of the invisible hand theory is that a free market is capable of bringing itself to equilibrium without any influence from the government or other institutions (OpenStax, 2019). ……please click the icon below to purchase full solution at $5