Which of the following is an example of the 'invisible hand' at work?

• A. The government sets a price ceiling on essential goods.
• B. A consumer chooses not to buy a product due to a government ban.
• C. A company receives a subsidy to encourage production.
• D. A baker produces bread to earn a profit, which also provides food for the community.

Answer: (D)

Verified step by step guidance

1. Understand the concept of the 'invisible hand,' which refers to the self-regulating nature of the market where individuals pursuing their own self-interest unintentionally benefit society as a whole.
2. Identify examples where market participants act based on their own incentives without direct government intervention or control.
3. Analyze each option to see if it reflects market forces working naturally or if it involves government actions like price ceilings, bans, or subsidies.
4. Recognize that when a baker produces bread to earn a profit, they are motivated by personal gain, but this action also provides a valuable good to the community, illustrating the 'invisible hand.'
5. Conclude that the example of the baker producing bread aligns with the 'invisible hand' because it shows how individual self-interest can lead to positive social outcomes without external enforcement.