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
28 How do we promote
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
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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- Spring '09