Note: This is post #45 in a weekly video series on basic microeconomics.
In competitive markets, the market price—with the help of the Invisible Hand—balances production across firms so that total industry costs are minimized. In this video by Marginal Revolution University, economist Alex Tabarrok explains how competitive markets also connect different industries. By balancing production, the Invisible Hand of the market ensures that the total value of production is maximized across different industries.
(If you find the pace of the videos too slow, I’d recommend watching them at 1.5 to 2 times the speed. You can adjust the speed at which the video plays by clicking on “Settings” (the gear symbol) and changing “Speed” from normal to 1.25, 1.5 or 2.)
Previous in series: Entry, exit, and supply curves: Increasing Costs
