It is important to keep in mind that some of this

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Unformatted text preview: eventually be relatively radical. Domestic producers, for example, may eventually respond to consumer choices by deciding they can no longer compete with foreign competitors. Therefore the resources they were using become available for alternative uses domestically. In summary, the market process is very efficient at communicating the need for change automatically and once again, prices send the signals. 11 Chapter 2: The Market System and The Circular Flow Slide 28 How do we promote technological progress? This final question is addressed automatically in the market process (through prices), too. We choose to employ the most efficient (and leastcost) production processes available at any given time. When technological advances enable us to employ technology in ways that yield greater efficiency (and lower costs), we alter our choices. Chapter 2 28 Learning Objective 2-4 Slide 29 The “Invisible Hand” Adam Smith in his 1776 book, The Wealth of Nations, described the process of a market economy at work as though it were guided by an “invisible hand.” The market process he described as an invisible hand all...
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