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# Agricultural Opportunity Cost

## Definition

The value of alternative uses of land and labor that farmers must forego when choosing particular crops or production methods, which Smith argues was poorly understood and frequently ignored under medieval agricultural systems focused on subsistence rather than market production.

## Source Chapter

Book III, Chapter 2

## Context

Smith uses opportunity cost reasoning to show how medieval agricultural systems prevented efficient resource allocation, arguing that when farmers cannot sell in broader markets or choose their production methods freely, they cannot make economically rational decisions based on comparative advantage.

## Economic Domain

Production

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