# Exchange

## Definition

The act of giving up something possessed in return for something desired, forming the mechanism through which surplus production is converted into useful goods and services, and enabling the division of labour by providing assurance that specialised output can be traded for needed goods.

## Source Chapter

Book I, Chapter 2

## Context

Smith identifies exchange as the fundamental economic mechanism that transforms individual self-interest into social benefit, arguing that it is this disposition which originally gives occasion to the division of labour.

## Economic Domain

Exchange

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