Economic Lowdown Audio Series: Episode 3—The Role of Self-Interest and Competition in a Market Economy

Who described the opposing, but complementary forces of self-interest and competition as the invisible hand?

Adam Smith

What market force is the "regulator" of economic activity?

Competition

self-interest

Motivator of Economic activity. That which each firm, property owner, worker, and consumer believes is best for itself and seeks to obtain.

competition

Regulator of Economic activity.

What market force is the "motivator" of economic activity?

Self-interest

Why do some argue that a market economy requires little government regulation?

Self-interest is held in-check by competition.

According to the audio, what causes people to work or go to school?

They are self-interested.

Self-interest produces behavior that benefits others.

True

invisible hand

a term coined by Adam Smith to describe the self-regulating nature of the marketplace

market economy

economic system in which individuals own most of the resources and control their decisions on production and consumption of goods and services are based on voluntary exchange in markets. Government plays a small role.