The invisible hand is a force that moves an economy to the most efficient use of resources by individuals and businesses acting in their own best interest.
The invisible hand guides the producer to produce at the lowest cost possible to maximize profitability. For consumers, the “hand” shows their unwillingness to pay too much for a product and leads the consumer to the seller that offers a desired product at the lowest price. The “hand” also provides guidance in producing the optimal quantity of a good or service with the least amount of waste. The invisible hand guides companies to produce more of a good or service if consumers are willing to pay a higher price.Every individual is continually exerting himself to find out the most advantageous employment for whatever capital [income] he can command. It is his own advantage, indeed, and not that of the society, which he has in view. But the study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to society … He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand [emphasis added] to promote an end which was not part of his intention. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.
