Prices Toolkit
Explore prices, starting with Adam Smith.
He'd hardly be the father of economics if he'd never said anything about prices. But price theory has come a long way since Adam Smith wrote. Use our toolkit to start with Smith and explore prices with your students.
Explore the original text
- Key passage: Natural Prices in Wealth of Nations
- Key Passage: Market Prices in Wealth of Nations
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"Wealth of Tweets" in the classroom exercise
Reading Guides
AdamSmithWorks reading guides insert factual, interpretive, and evaluative questions directly into the original text for exploration with your students. Adam Smith used the “invisible hand” phrase only twice in his published books but both times are important and worth understanding:
Optional extension:
- Wealth of Nations Book I Chapter VI: Of the Component Parts of the Price of Commodities on wages, profit, and rent, or the prices of inputs.
- Wealth of Nations Book I Chapter V: Of the Real and Nominal Price of Commodities on the interaction of Smith’s theory of value with prices.
Bellringer
Set the stage for learning.
Teaching Guides
Econlib Guides are resources for tackling topics in your classroom. Find definitions, activities, lesson plans, videos, and more for your classroom.
- High School: Markets and Prices (CEE key topic)
- High School: Price Ceilings and Floors (CEE key topic)
- College/University: Real, Relative, and Nominal Prices
- College/University: Supply and Demand, Markets and Prices
Lesson Plans
- Students may enjoy combining straightforward price theory exercises with our Pins, Pencils, and the Invisible Hand lesson plan. This lesson plan pairs a video about making a pencil with an exploration of AdamSmithWorks’ pin factory to get students thinking about the coordination that went into making pins in Adam Smith’s time. The lesson includes optional guided deep readings of the “invisible hand” passages, with discussion/homework questions.
EconLog Price Theory problems with online discussion
You may have heard that price theory needs a revival. We agree. The economic way of thinking has of late been subsumed by mathematical analysis absent intuition. Fortunately, Professor Bryan Cutsinger is here to help.
The problems on EconLog include a comments section in which people worked through the problems with help from Prof. Cutsinger and the solutions include a comprehensive explanation. New questions are posed every month. We’ve included the first three in this toolkit.
Problems and solutions are also offered as printouts.
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Introduction to EconLog Price Theory and the solution
- Problem without solution or Problem with solution (for easy printing)
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Electric Vehicles and Price Theory and the solution
- Problem without solution and Problem with solution (for easy printing)
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Cotton vs. Wool and the solution
- Problem without solution and Problem with solution (for easy printing)
Price theory, a quick review
These resources can help refresh your understanding of price theory and may be used with advanced students.
- Essay: Adam Smith on the Labor Theory of Value by Steven Horwitz discusses how Smith’s reliance on labor as the ultimate source of value contrasts with modern ideas of economic value.
- Essay: Smith’s Labor Theory Thought Experiment by Eric Schliesser rejects that Smith held a labor theory of value at all—that for Smith, labor is relevant for exchange value but not utility value.