A Revolution in Economic Theory: Prologue
Sinha, Ajit
2016-08-19 00:00:00
[Why do certain things have value or price and are not free as air? The classical economists thought it prudent to distinguish between two kinds of goods that are not free: one is fixed in supply and the other can be increased or reproduced. They thought that the goods that are fixed in supply do not play any significant role in the economic life of society. Therefore, they can be left out of consideration of a theory that seeks to explain the phenomenon of price as an aspect of our economic life. As early as 1776, Adam Smith introduced the problem in terms of a rule of exchange between two hunters in ‘the early and rude state of society’:]
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[Why do certain things have value or price and are not free as air? The classical economists thought it prudent to distinguish between two kinds of goods that are not free: one is fixed in supply and the other can be increased or reproduced. They thought that the goods that are fixed in supply do not play any significant role in the economic life of society. Therefore, they can be left out of consideration of a theory that seeks to explain the phenomenon of price as an aspect of our economic life. As early as 1776, Adam Smith introduced the problem in terms of a rule of exchange between two hunters in ‘the early and rude state of society’:]
Published: Aug 19, 2016
Keywords: Market Price; Capital Good; Natural Rate; Consumption Good; Total Labor
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