2022_심화영어

What was the problem that Adam Smith was struggling with? Q1 Adam Smith (1723–1790) was born in Scotland and contributed to the fields of philosophy and economics. He wrote The Wealth of Nations and is known as the father of modern economics. Read On 1 Predict what will come next. Q2 Connecting to You Name one commodity whose value in exchange is higher than its value in use, and explain why. Which do you think is more valuable: water, which is needed to sustain life, or diamonds, which we use to adorn ourselves? Let’s think about it this way: If a one-liter bottle of mineral water and a ring with a diamond weighing only one gram were placed on the table and you could take only one, which would you take? Did you know that this problem has been a puzzle for a very long time? Adam Smith, the father of modern economics, struggled to produce a fully acceptable theory of value, and he was particularly concerned with the apparent paradox of the high value placed on unnecessary goods like diamonds, compared to the low value of essential goods like water. Smith did indeed argue that there was a separation between “value in use” (the usefulness of a good for satisfying human needs or desires) and “value in exchange” (the price that a good can command in the market). He recognized that this distinction could create difficulties in understanding the nature of value and how it was determined in a market economy. Smith’s diamond-water paradox went unsolved until later economists combined the two theories of subjective valuation and marginal utility. Let’s see how economists arrived at that explanation. 05 10 15 paradox mineral apparent valuation marginal New Words 76 Lesson 3