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# Market Price Adjustment Mechanism

## Definition

The natural process by which market prices fluctuate around natural prices based on temporary variations in supply and demand. This mechanism ensures that resources are allocated efficiently without the need for government intervention.

## Source Chapter

Book IV, Chapter 6

## Context

Smith uses this mechanism to explain how prices naturally adjust to changing conditions, arguing that government attempts to control prices through restrictions and monopolies interfere with this efficient natural process.

## Economic Domain

Exchange

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