The Wealth of Nations Chapter 7 Book 1 - Understanding Natural Prices and Market Prices

In this video, we dive deep into the concepts of natural price and market price of commodities. The natural price refers to the ideal rate for wages, profit, and rent, based on the general economic condition of a society. This is the price that just covers the cost of production without any additional profit. However, the market price can fluctuate above or below the natural price depending on the balance of supply and demand.
When supply is low and demand high, the market price can rise, creating a temporary surplus for producers. On the other hand, when supply exceeds demand, prices drop to sell the excess. We also explore the impact of factors like monopolies, regulations, and the rarity of goods on price levels. Over time, despite fluctuations, market prices generally revert back to the natural price. Stay tuned for more insights into how wages, profits, and rent shape economic transactions.

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00:00 - Of the Natural and Market Price of Commodities
00:13 - Natural Rates and Natural Price
01:05 - Market Price Dynamics
02:14 - Supply and Demand Adjustments
02:48 - Fluctuations and Stability
03:25 - Impact of Regulations and Monopolies
04:13 - Long-term Market Adjustments
04:33 - Conclusion