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# Colonial Economic Efficiency Analysis

## Definition

The systematic examination of how different policies and practices affect the productive use of resources in colonial economies, including the comparison of actual outcomes with potential efficiency under alternative arrangements. This analysis reveals the economic costs of monopoly policies.

## Source Chapter

Book IV, Chapter 7

## Context

Smith employs efficiency analysis throughout his discussion of colonial policy to demonstrate how monopoly restrictions reduce economic productivity. He argues that more efficient resource allocation under free trade would generate greater overall wealth for both colonies and the mother country.

## Economic Domain

General Theory

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