Question

1. Is there a difference between Aristotle’s and Saint Thomas’ concept of a just price and Adam Smith’s natural price? If yes, what is the difference?

2. Is there a difference between Aristotle’s simple, two-party exchange, and Adam Smith’s market exchange? if yes, what is the difference?

Answer 1

Natural Price of the products are those prices that are fixed based on the entire cost of production or manufacturing. This includes the raw material price, the cost of transport, the cost of production, labor cost and profit. It will not be fixed based on the present demand or supply. In short natural price of the product refers to the actual price of the product.

Market price of the product is determined by the demand and supply of the particular product in market. Retailers tend to fix the price if the demand is high and supply is less. They will try to make use of the circumstances to alter the prices of the products. The concept of altering prices based on external factors are referred to as market price.

In the long run, the price of the products will affect the supply of products, since the price of the products tend to stabilize over a period of time. The products will start having competitions which will force the retailers to reduce the prices. The manufacturers will then think of a way for sustainability and start influencing the price of the products.