997 B
Market Extent
Definition
The geographical and economic reach of a market, determining the potential size of demand for goods and services. The extent of the market directly limits the degree to which division of labour can be developed, as a larger market provides greater opportunity for exchange and specialisation.
Source Chapter
Book I, Chapter 3
Context
The central thesis of the chapter, establishing that the division of labour is fundamentally constrained by how far goods can be exchanged. Smith argues that when markets are small, individuals cannot specialise fully because they cannot exchange their surplus production for other goods they need.
Economic Domain
Exchange
Original Wording
Smith states that the extent of the division of labour must always be limited by the extent of the market.
Modern Interpretation
Market size determines the viability of specialised production because producers need sufficient demand to exchange specialised output.