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

• A. A company receives a government subsidy to produce electric cars.
• B. A baker produces bread to earn a profit, unintentionally providing food for the community.
• C. A government agency sets the price of wheat to stabilize the market.
• D. A charity organization distributes free meals to the homeless.

Answer: (B)

Verified step by step guidance

1. Understand the concept of Adam Smith's 'invisible hand': it refers to the self-regulating nature of the marketplace where individuals pursuing their own self-interest unintentionally benefit society as a whole.
2. Identify the key feature of the 'invisible hand'—actions motivated by personal gain that lead to positive social outcomes without direct intention or government intervention.
3. Analyze each option to see if it fits this description: the company receiving a subsidy involves government intervention, so it is not an example of the 'invisible hand'.
4. The government agency setting prices is a direct intervention, so it does not illustrate the 'invisible hand'.
5. The baker producing bread to earn profit, which unintentionally provides food for the community, perfectly exemplifies the 'invisible hand' because the baker's self-interest leads to a social benefit without planning or coercion.