The Law of Diminishing Returns
1. What Is the Law of Diminishing Marginal Returns?
It states that smaller increase in output can result from adding some additional factor on products. (Page 186)
2. When did the law of diminishing start?
It started at the 18th century. (Page 186)
3. Who published the tracts to develop the diminishing of law and when was that?
The tracts were published by David Ricardo, Thomas Malthus, Edward West, and Robert Torrens in the year 1815. (Page 186)
4. What causes the land to lose its productivity?
It loses productivity when it reduces its quality such as fertile soils. (Page 187)
5. According to Ricardo, what causes the land to be more productive?
He says that productivity of land can only be improved by increasing the capital during planting process. (Page 187)
6. Where else can law of diminishing be applied?
According to Malthus this law can also be applied on grain prices and he says that food production could only grow arithmetically. (Page 187)
7. What is the nature of soil?
It’s the nature of soil that it gradually reduces productivity as it loses fertility over period of time. (Page 187)
8. What was Nassau senior’s view toward the law of diminishing?
He had a feeling that it was one of his most four prepositions. And as an explanation of diminishing returns that differentiates between the average and marginal costs. (Page 187)
9. What was Edgeworth’s approach towards the law?
He made an assumption that the input of land was fixed. Then he created a table that he used to prove on the productions. (Page 187)
10. What did the values in the table demonstrate?
They showed the relationships between total, marginal, and average product. (Page 187)
11. Was Edgeworth’s idea applicable on agriculture only?
No, it was also applicable on manufacturing industries. (Page 187)
12. Why are the units in agriculture referred to be homogeneous?
This is because they are interchangeable and each of them has a great role for achieving great output. (Page 188)
13. What role does the law of diminishing play?
The law gives central explanation on why there is downward-sloping short-run in demand curves. (Page 188)
14. What was Karl Menger’s view towards the law?
Depending on the assumptions made on the diminishing returns, every assumption is correct since it gives the required output. (Page 189)
15. Why did Menger criticize the axiomatic acceptance?
He did this because in economics no need to argue on whether the law is true or not. (Page 189)
16. What was Andrew’s advice to manufacturing businesses?
He urged then to maintain high capacity in order they don’t their customers in times of demand. (Page 189)
17. What else can replace the law of diminishing?
It can be replaced by the idea of heterogeneous scares resources. (Page 190)
18. When does the idea of heterogeneous apply?
It can only be used when there are great and aggregate changes in involved quantities. (Page 190)
19. What is the impact if the law of diminishing returns did not exist?
Without this law, it could be difficult to have production and hence the living standards go down.
20. Does output depend on the cost?
Yes, because cost increase with increase in output since the workers feels motivated and tend to work hander. (Page 191)
The harmonious order of nature
1. Who was smith and how did he develop his doctrine?
He was a great electric, and he developed his doctrine through nurturing itself through individual man. (Page 199)
2. What was the philosopher’s idea on the origin of the earth?
They believed that God was the creator of everything and had powers over them all. (Page 199)
3. What was Smith’s believe on the origin of the earth?
He believed that superstition science gave birth to the first theism that arose among the nations. (Page 199)
4. Why did Smith showing more catholicity more than scientific discrimination?
He did so because he wanted to prove on his belief on the origin of everything in universe. (Page 199)
5. What made Smith to be referred to a teacher?
This is because he had the best predecessors on every idea that was brought on. (Page 199)
6. Why did people say that Smith have been made for Physiocrats?
This is because Smith had already formulated his central doctrine before he came into contact with them or their writings. (Page 200)
7. What should one do so that he may understand the wealth of nations?
For one to understand he had to read the theory of moral sentiments first. (Page 200)
8. What was Smiths plan after realizing people did not understand the content in the books?
He decided to show them where there were difficulties and make it simpler for them to understand. (Page 200)
9. What made wealth of nation the better book?
It because the book had good methods of analysis, basic assumptions, and it had a good conclusion making everyone using it understands. (Page 201)
10. What did the theory of moral sentiments have?
The book had moral sentiments, interesting, controlled by natural justice, and also operated under in conjunction with the physical forces. (Page 202)
11. What can be terrible in a society?
Having no self-interest, justice, and having no beneficiaries along the operation. (Page 202)
12. Why is it important to reward an industry?
It’s because through rewarding the employees fee encouraged and hence improved output. (Page 202)
13. What does Smith say about process of nature?
He says that the process of nature operates well by man’s standards. (Page 204)
14. Why does judgement through man’s standard result to imperfect justice on earth?
It’s because man’s standards are inadequate basis for appraisal. (Page 206)
15. Why is theory of moral sentiments not important?
It’s because it aims on individuals’ beneficiary and self-interest. (Page 206)
16. What did the author of the of the book emphasis on?
The author put more emphasis on nature, but not the wealth of nations. (Page 207)
17. Does man do favor to help his brethren?
No, every man does according to his interest but not much concern towards helping. (Page 212)
18. What was the importance of benevolence in the economic order?
According to Smith, it was of lees importance to the economy. (Page 213)
19. What was the effect of wealth in England?
It helped in bringing reforms in the country. (Page 214)
20. What is the importance of division of labor?
Division of labor improves intelligence of doing work mutual character between workers. (Page 215)
INET Talk on Adam Smith, October 21, 2017
1. What are three assumptions that took hold on economists mind?
All economist know that economics is a real science, that most successful sciences exhibit cumulative progress, and the study of history by students of economics is unnecessary
2. What is principle of extended present?
It is the principle showing that workers like the wealth nations can go back to Adam’s after having many reading and still finds something of great impact.
3. What did Boulding say about smith?
That smith provides students with a feeling for peak achievements of human being.
4. What is the importance of formal education?
It gives student sense of an extended present and it plays main role of ensuring intellectual poverty ends.
5. What is the main problem confronting economist field?
It is a perennial problem.
6. What make perennial problem unsolvable?
It is because people have different interpretation on works of those came before.
7. Why is Adam smith referred to a good case study?
It is because most of the British classical political economists took it as their starting point.
8. What did British discover regarding general economics law?
They discovered that the virtues of free trade were not general at all.
9. Why did they name the schools the Germany Historical School?
This is because they thought that a generalizing theoretical approach to social science that had no truth study on unique historical development of each country, its political, juridical, economic, and cultural institutions.
10. What did Viner say about Adam Smith and Laissez Faire theories?
It is a classic in interpretation literature that was used as assignment in his class.
11. How did Viner differ from Adam?
They were not sure on which best way to organize a liberal society.
12. Three advantages for general leaders by George Stigler?
They include it is less encumbered with editorial material, it has useful marginal summaries of the text, and, as Smith would observe, it is a good deal cheaper.
13. What gives the man’s behavior?
Man’s behavior is found on rational and persistent of self-interest.
14. What helps in understanding of liberal society?
It’s through interpretations of the Adams theory.
15. What is the need of people going back to was written?
So that they may gain knowledge and skills about economics field hence improved outcomes.
16. Why did Viner defend Smith?
Viner did so because they shared similar information and he had to defend him for their sake.
17. Why did Viner accuse the defenders of the market?
It because they were embracing a strict adherence to laissez faire that was unfair, and most who defended markets were not, in the language of today, market fundamentalists.
18. Who was Viner?
His is a rich paper that explorer with many themes, but one of its chief messages is to remind Smith’s antagonists that their roles governed the economy.
19. What happened in the 18th century?
Members of the German Historical School were convinced that the purportedly general economic laws that the British classical had claimed to have discovered.
20. What role did INET play?
It supports research in and the teaching of the history of economics.