Economics Archives

The Colorado River Water Shortage: The Cause & Impact

What’s causing the Colorado River water shortage? What impact will it have on the river itself, water users, and the wider economy? Reservoirs throughout the Colorado River drainage have become critically depleted because current water use agreements divert more irrigation water to farmers than the river can provide. Reduced availability of irrigation water could potentially diminish the nation’s food supply and drive up prices. Keep reading to learn more about the cause and impact of the Colorado River water shortage.

Freakonomics: Book Club Exercises for a Thoughtful Discussion

Would you like to understand your fellow humans better? When is conventional wisdom wrong? What if you thought like an economist? Authored by Steven D. Levitt and Stephen J. Dubner, Freakonomics: A Rogue Economist Explores the Hidden Side of Everything applies the tools of economics to explain real-world phenomena that aren’t conventionally thought of as “economic.” The book contains fascinating implications and applications. Continue reading for discussion questions and a quiz that you can use with your Freakonomics book club.

The Wealth of Nations by Adam Smith: An Overview of a Classic

What’s so great about the free market? Does self-interest benefit everyone? How should taxes be used? Many economists consider The Wealth of Nations by Adam Smith to be one of the major foundational texts of their discipline. Writing in 1776, Smith argues that free markets are the best institution for cultivating a nation’s wealth. Continue reading for an overview of this important classic work.

Adam Smith: Self-Interest Is the Engine of a Free Economy

Can self-interest be a good thing? What does it have to do with labor, embargoes, and taxation? According to Adam Smith, self-interest in the context of a free market is what a nation needs in order to flourish. In The Wealth of Nations, he argues that free markets harness the power of rational self-interest to incentivize the production of useful goods while efficiently distributing surplus wealth. Read more to understand Smith’s case for free markets and individual self-interest as the best ways to grow a nation’s economy.

Adam Smith: Specialization of Labor Leads to More Wealth

What is specialization of labor? What impact does it have on workers and on the economy as a whole? According to Adam Smith, specialization of labor contributes to the wealth of a nation. In his seminal work, The Wealth of Nations, Smith explains three ways this happens. He also discusses how a market’s size affects the amount of specialization that can occur. Continue reading to learn Smith’s views on labor specialization.

How Does a Country Make Money? Adam Smith Explains

How does a country make money? What separates a wealthy country from a poor country? Many economists consider Adam Smith’s The Wealth of Nations one of the major foundational texts of their discipline. Writing in 1776, Smith argues that free markets are the best institution for cultivating a nation’s wealth. Keep reading to learn the basics of how a country makes money.

Adam Smith’s Labor Theory of Value: Everyone’s a Merchant

Could you live your life without ever buying something that someone else produces? What do you produce that others buy? In The Wealth of Nations, Adam Smith lays much of the groundwork for the field of economics. He makes the case for free markets, and he puts forward his theories on what markets exchange and how they’re able to facilitate this exchange. One of his theories is that labor is the basis of value. Let’s take a look at Adam Smith’s labor theory of value.

Is Market Self-Regulation a Thing? Adam Smith Thinks So

How are prices set? What role does competition play in an economy? Do markets actually regulate themselves if they’re free? In The Wealth of Nations, Adam Smith argues that free markets are the most efficient way of directing the production and exchange of goods to grow a nation’s wealth (and thereby enable the specialization of labor). He explains the mutually-beneficial interplay of markets and prices. Read more to understand Smith’s argument that market self-regulation really works.

The Cost of Capital: 3 Factors That Influence Capital Lending

How is the cost of capital determined? What impacts capital lending markets? One of a business’s costs is its capital, which it usually borrows from capital lenders. This lending happens in a competitive market. In The Wealth of Nations, Adam Smith discusses three factors that influence that market: risk to the investor, profit on capital, and changes in supply chains. Continue reading to learn how the markets determine the cost of capital, according to Smith.

2 Factors That Influence the Cost of Labor (Adam Smith)

How are wages set? Why does geography affect the cost of labor more than the cost of goods? The natural price of a good changes in accordance with changes in any of the costs of production. In The Wealth of Nations, Adam Smith identifies labor as one of these costs. He discusses how supply and demand, as well as the living conditions of workers, influence the cost of labor. Continue reading to understand how the cost of labor operates in an economy.