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# Market Size Threshold Effects

## Definition

The economic principle that certain levels of market size are necessary to support specialized production and efficient division of labour. Markets below these thresholds cannot support the same degree of economic specialization and efficiency.

## Source Chapter

Book IV, Chapter 6

## Context

Smith uses this concept to explain how market size affects the feasibility of specialized production and the extent of division of labour that can be supported in different economic contexts.

## Economic Domain

Exchange

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