(I) Difficulties of barter lead to the selection of one commodity as money. (T/F

Question

(I) Difficulties of barter lead to the selection of one commodity as money. (T/F)?

(II) "...the extent of this division [of labor] must always be limited by the ... extent of the market" (A) The surplus created by the division of labor can only be sustained by the extent of the available market. (B) A man should never produce a surplus part of the produce of his own labor, over and above his own consumption. (C) Only a large market can provide the workers needed for division of labor.(D) Market prices are independent of market extent.

(III) According to Adam Smith in The Wealth of Nations, which statement below is correct? (A) A commodity which never varies in its own value, can never be an accurate measure of the value of other commodities. (B) A commodity which is itself continually varying in its own value, can always be an accurate measure of the value of other commodities. (C) A commodity which is itself continually varying in its own value, can never be an accurate measure of the value of other commodities. (D) A commodity which is itself continually varying in its own value is perfect to batter with.

(IV) In The Wealth of Nations, Adam Smith states the whole price of any commodity resolves into three. What are these three parts? (A) Labor, Rent, and Profit. (B) Production, Shipping, and Merchandising. (C) Production, Shipping, and Marketing. (D) Labor, Rent, and Investment

Explanation / Answer

I.True

II.(C)

III.(C) A commodity which is itself continually varying in its own value, can never be an accurate measure of the value of other commodities.

For example, gold and silver. These metals are sometimes cheap and sometimes dearer.

IV.(A)

The three parts are the rent of land, the wages of labor, and the profits of stock.

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