The invisible hand promotes society's interests because:

• A. individuals pursuing their own self-interest unintentionally contribute to the overall economic well-being
• B. businesses are required to maximize social welfare by law
• C. markets only function properly when everyone acts altruistically
• D. government regulations always ensure that resources are allocated efficiently

Answer: (A)

Verified step by step guidance

1. Understand the concept of the 'invisible hand' introduced by Adam Smith, which suggests that individuals pursuing their own self-interest can lead to positive outcomes for society as a whole.
2. Recognize that the invisible hand operates through decentralized decision-making in markets, where individuals and firms act based on their own incentives without intending to promote social welfare explicitly.
3. Analyze why the other options are incorrect: businesses are not legally required to maximize social welfare, markets do not rely on altruism to function properly, and government regulations do not always guarantee efficient resource allocation.
4. Conclude that the invisible hand works because individuals, by seeking their own benefit, unintentionally contribute to the overall economic well-being of society.
5. Summarize that this concept highlights how self-interest and market mechanisms can align private incentives with social benefits without direct coordination.