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# Extraordinary Profits

## Definition

Returns on capital that significantly exceed the common or average profits in a particular trade or location, typically occurring when new enterprises are established or when demand conditions temporarily favour certain commodities.

## Source Chapter

Book I, Chapter 10

## Context

Smith notes that extraordinary profits often occur when new manufactures are established or when particular trades experience unusual demand. However, he argues that competition eventually reduces these exceptional returns to the common level, demonstrating the equilibrating tendency of free markets.

## Economic Domain

Distribution

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