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# Market Price Mechanism

## Definition

The natural process by which market prices adjust to balance supply and demand, coordinating economic activity without central direction. Smith argues that this mechanism is disrupted by government intervention and trade restrictions.

## Source Chapter

Book IV, Chapter 2

## Context

Smith discusses how market price mechanisms coordinate economic activity and how government intervention through trade restrictions disrupts these natural price signals, leading to inefficient resource allocation.

## Economic Domain

Exchange

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