UGFH1000

The Wealth of Nations

Study Questions
The following questions are offered to you as an optional guide to enhance your textual
understanding of the text. If at any point you feel totally drawn into the world of Rousseau and
prefer not to stop at each step to read yet another study question, do feel free to do so.
Introduction and plan of the work (para. 1-5)
1. What makes the necessaries and conveniencies of life possible for a
person and the nation?
2. What is Smith curious about the difference between poor and rich
nations?
Book I
Chapter I, para. 6-9
1. Smith proposes that division of labor contributes to improving the
productive powers of labour. What examples has he given to illustrate this
observation?
2. Does agriculture or manufacture benefit more from the division of labor?
Why?
Chapter I, para. 10-16
1. What are three advantages of division of labor?
2. What is Smiths idea regarding the life of each workman as division of
labor is applied?
3. How are the laborers related to each other in division of labor, as joint
labor?
4. What is similar about the situation of the meanest person in a civilized
country and the industrious and frugal peasant? What point is Smith
making by bringing them together?
Chapter II, para. 17-21
1. Smith proposes that the division of labor is a natural human propensity.
How does he make his argument?
2. What is the result on the individual life when he addresses his own
interest?
3. What conclusion has Smith made regarding the human way of making
use of the difference of talents? How would you describe the ideal he is
looking up to?
Chapter III, para. 22-25
1. The size of the market is the key issue that Smith is exploring in these
several paragraphs. What is it about the market interests Smith?
2. What is Smiths view on towns as markets?
3. What is Smiths evaluation on the difference between water-carriage and
land-carriage as means of expanding markets?

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Chapter III, para. 26-29

1. Here, Smith extends the idea of the market to the history of civilization.
What, for Smith, distinguish a civilized state from an uncivilized one?
2. What examples does he give to show the development of civilizations are
closely linked to commerce?
Chapter IV, para. 30-37
1. What does Smith mean by a commercial society? What are its features,
and what is the role of each individual?
2. What examples has Smith given regarding the common instrument of
commerce in human history?
3. Of all these instruments, Smith notes that metal has been preferred. Still,
what may be its disadvantages?
4. What is the solution to the disadvantages?
Chapter IV, para. 38-43
1. What does value in use and value in exchange mean?
2. What issues does Smith want to investigate in terms of value?
Chapter V, para. 44-48
1. Why is labour the real measure of the exchangeable value of all
commodities?
2. How then does Smith extend this idea to his definition of wealth?
3. Smith also notices the difficulty in maintaining this definition. Why?
4. Measuring labor is difficult. What solution has Smith proposed?
Chapter V, para. 49-52
1. What makes money a better measure of labor value? And better than
what other instruments?
2. Despite money as the common measure, Smith observes that the value
of labor may still vary. According to what factors does Smith think it vary?
3. What is the result of this varying value on the price of labor?
Chapter VI, para 53-55
1. Smith begins this chapter by making the point that the value of labor is
not often reflected in its price. In what context does he propose the
argument?
Chapter VI, para 56-62
1. In the advanced state of society, what are the three components that the
value of labor separated into?
2. What different principles do these components operate on?
3. From the point of view of the labourer, how does his experience change?
Chapter VII, para 63-68
1. What does Smith mean by the natural price? What components is it made
up of?

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2. What does this natural price mean to the person selling the commodity?
Chapter VII, para 69-77
1. What is the market price? What is it regulated by?
2. How do the quantity of a commodity brought to market and the effectual
demand affect its price? Which three scenarios does Smith present?
3. Does Smith think that the components in the price of a commodity
respond evenly to changes in the quantity of a commodity brought to
market and the effectual demand?
4. What conclusion does Smith draw regarding the difference between the
market price and natural price of a commodity?
Chapter VII, para 78-90
1. While Smith believes the market price of a commodity naturally
gravitates towards the natural price, it is also possible it does not. What
factors may keep the market price up above the natural price?
2. What is Smiths evaluation of trade secrets and monopoly? What impact
do they have on the price of commodities?
3. What kind of power does Smith compare the enhancement of market
price with?
4. Under what circumstances would the wages sink below the natural
price??
Chapter VIII, para 91-104
1. What factors change the original way that labor belongs to the laborer to
the reduction of wage?
2. What kind of relation does the laborer have with his master?
3. How much power do the workmen have towards maintaining and even
raising their wages, compared to their masters?
4. Having evaluated the behavior of masters and workmen, what does Smith
suggest to be the suitable level of wages?

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