Question

Suppose that after pork prices rise dramatically, voters demand that the government place price controls on bacon.
What is the “ invisible hand?" Why does it not solve this problem?
two sentences

Answer 1

The "invisible hand" refers to the self-regulating nature of a free market, where individual self-interests lead to efficient resource allocation and benefits for society as a whole. In the case of rising pork prices and calls for price controls on bacon, the invisible hand is ineffective because government intervention disrupts market signals, preventing the natural adjustment of supply and demand that would otherwise occur in response to price increases.