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# Agricultural Price Mechanism

## Definition

The market process through which agricultural prices are determined by the interaction of supply and demand, signaling information about scarcity and abundance to producers and consumers. Agricultural price mechanisms guide resource allocation in farming.

## Source Chapter

Book I, Chapter 11

## Context

Smith discusses how agricultural price mechanisms function to allocate resources efficiently, though he notes that government interventions like bounties and price regulations can distort these mechanisms and reduce economic efficiency.

## Economic Domain

Exchange

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