The market process he described as an invisible hand

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Unformatted text preview: ows consumers and producers to behave in self-interested ways while simultaneously assuring that our resources are used efficiently. Chapter 2 Learning Objective 2-4 29 How do we promote technological progress? Just as you would expect, market systems automatically address this question as well. Technological advances usually result in productivity gains among producers. To state this differently, gains in technological knowledge enable producers to use improved technological advances to gain production advantages because they can produce more output with no more input. For example, they may either gain time efficiency or be able to substitute technology for labor and save money in the process. Therefore, we are able to address integration of technological progress into the market system automatically because we will employ whatever makes us more efficient and yields lower production costs. Adam Smith mentioned an “invisible hand” that seemed to direct economic activity when describing the newly founded market system of America in 1776. To comprehend exactly what he was attempting to descr...
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