WorksheetsAdam Smith on Theory of Value
Total questions: 15
Worksheet time: 8mins
When was Adam Smith born and where
Adam Smith was born in Canada in 1980
Adam Smith was born in England in 1890
Adam Smith was born in Kirkcaldy, Scotland in 1732
Adam Smith was born in Kirkcaldy, Scotland in 1723
When did Adam Smith die
July 14, 1790
July 15, 1790
July 16, 1790
July 17, 1790
Smith did not get everything right. One of his most important errors, was his erroneous __________.
theory of value
both theory of value and explanation of price
explanation of price
explanation of division of labour
Smith's “labor theory of value” (LTV) explains that the value (and price) of goods is determined by __________.
the amount of labor that went into their production
the amount of capital that went into their production
the market forces of demand and supply
the government
In all forms, the“labour theory of value” (LTV) and its broader interpretations see the value of outputs as being determined by the value of the ________-.
capital that went into producing them
labour that went into producing them
inputs that went into producing them
either labour/ inputs that went into producing them
Smith erroneously sees _______ as the source of value.
capital/ inputs
labor/ inputs
demand
demand and supply
Modern economics considers that labour has value because _________________.
labour is the source of all value
the goods labor creates are valued by consumers
it is an input
it is the only input
Smith distinguished between “Value in use” or _______ and “value in exchange” or _____ with there being no relation between the two.
utility; price
price; utility
utility; surplus
price; surplus
According to Smith, the exchange value could be determined from __________.
the supply side i.e. by the LTV or cost of production theory
the demand side side i.e. by the consumers
both the demand and the supply side
the market forces
According to Smith’s “water/diamond paradox”, water, which is necessary for human life _____________; but diamonds which are a luxury ________________.
has/ have a low use value and a high exchange value; has/ havea high use value and low exchange value
has/ have a high use value and low exchange value; has/ have a low use value and a high exchange value
has/ have a high use value; has/ have a high exchange value
has/ have a low exchange value; has/ have a high use value
The “water/diamond paradox” paradox arose as Smith was thinking of _____ as use value, whereas he should have thought of _______ instead.
Total Utility; Total Satisfaction
Marginal Utility; Total Utility
Total Utility; Marginal Utility
Marginal Utility; Total Satisfaction
The core of the “economic way of thinking” today is to compare the additional benefits and additional costs of any prospective decision and chose the one that provides the most net benefits. This is commonly referred to as ___________.
Opportunity Cost
Thinking at the margin
Money Cost
Transfer Earning
•Goods don’t have value because labor has value; labor has value because the goods labor creates are valued by consumers.
True
False
