Wealth Of Nations By Adam Smith Summary

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trade when a country can produce at a lower opportunity cost. This is related to the rent theory because both involve the advantages of one “commodity” over the other. They both are produced at the lowest cost possible which means that one has the advantage over the other. Finally, the best land creates an advantage because it can produce more, and the comparative advantage of producing a commodity a lower price creates a bigger profit. Overall, Ricardo was different than other political economist even though he began studying economics after reading “The Wealth of Nations” by Adam Smith. Ricardo is most known for his theory of rent and his theory of comparative advantage. Some of his ideas are still relevant today including his…show more content…
Productivity was lower until the creation of the division of labor which is why Smith finds it so important. Nonetheless, the division of labor created economic, social, and behavioral effects. Economically, the division of labor created a larger quantity in a shorter amount of time. It created more productivity, which overall was better for the economy. Furthermore, this was beneficial to the economy in an industrial way because it helped create new machinery and ways of completing jobs. However, it is also effected by the market because problems occur when the market is small (Wealth of Nations, p. 85) Nonetheless, the social and behavioral aspects are effected as well. Smith believes that workers become “stupid” because they are so accustomed to doing a single job that they cannot do anything else. This effects the social and behavioral aspects because the workers become inhumane and barely good for anything. They do not know how to interact, and they cannot come up with new ideas. The concept of the division of labor was a good idea, but there were concerns with it. Another topic found in Smith’s division of labor is “increasing returns to scale” and how the “virtuous cycle of growth” occurs because of the division of labor. Increasing returns to scale relates back to productivity and how more can be produced with the division of labor. However, if too much is produced than supply will be above demand which in
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