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# Market Demand Regulation

## Definition

The economic mechanism where the extent of market demand determines the scale of production and specialization possible in any economy. This regulation ensures that neither employment nor subsistence can increase beyond what the demand from country areas will support, maintaining equilibrium between production and consumption.

## Source Chapter

Book III, Chapter 1

## Context

Smith presents this as the automatic regulator of economic development, explaining how market forces maintain balance between town and country economies and determine the extent of division of labour possible in any society.

## Economic Domain

Exchange

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