# 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

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