Answer to Question #293219 in Microeconomics for Shabir ullah

Question

What does the invisible hand of the market place do?

Answer 1

This is a metaphor that explains how slef interested individuals in a free market economy operate through a system of mutual interdependence

It allows the market to reach at an equilibrium without government or any other intervention forcing it into unnatural patterns. Surplus and shortages in supply are avoided when supply and demand find equilibrium naturally.