ABSTRACT
An economist is armed and dangerous. Watch out for the invisible hand (One of the top 10 reasons to study economics).
Ever think about how our very complex economic and social world operates? Do we live in a centrally controlled system like the Matrix movies that makes choices for us? No, such a system generally only occurs in movies. Instead, we live in a decentralized market systemwhere each of us self-determines our own choices. But how is it possible for each of us to make our own choices and yet the system as a whole is efficient in satisfying our choices? The simple answer is market prices operate as signals directing our choices. The full answer lies in revealing Adam Smith’s invisible hand through economic theory.
