SmithSmith

Smith, the father of economics, have authored the invisible hand which is able to explain all sorts of economic phenomena in all fields. The book has included the valuable views of Adam Smith about free market. Adam Smith explained the concept and told that businessmen or entrepreneurs always aim for the best profit and consumers always do aim for the lowest price. Consumer choice thus would become the force that influences the price in the market. Consumers would demonstrate their demand or negligence towards products that appear in the market. These consumer demand or pressure would thus encourage entrepreneurs or producers to invest more on the same product and bring more of them into the markets. Thus it is nothing but the consumer demand that pressurize the producers to invest their money into the profitable industry. Thus industry brings the most demanded goods to the markets and consumers also receive their favorable products, thereby resulting in the general economic well being of the society. Adam Smith considered this market-based system as a great advantage as people are forced to respond (producers) according to the want and demands of other people. Free market is the concept in which price is regulated by the corresponding demand or supply. Trade and business would be completely voluntary in free market concept without any interference from force, rule or fraud. The theory of supply and demand would rule the economy bringing the prices of the products towards a typical equilibrium state that would balance the demand and the supply in a free market set up.