Examkin

Question

Difficulty: MediumDivision of Labour and Specialization

A commercial bakery in Ibadan intends to divide its production into specialized workstations where individual workers handle single tasks exclusively. However, management discovers that local consumer demand is insufficient to absorb the output of continuous large-scale manufacturing. Which factor primarily limits the bakery's implementation of division of labour in this scenario?

  1. The extent of market demandAnswer
  2. B
    The decline in individual worker craftsmanship
  3. C
    The accumulation of external economies of scale
  4. D
    The reliance of workers on direct production methods

Answer

The extent of market demand
The extent of market demand dictates how far a firm can break down its production process. When demand is low, producing goods in large quantities via specialization leads to overproduction and unsold stock, making division of labour inefficient and unviable.

Step-by-Step Solution

1
Analyze the production scenario described in the stem
The firm wants to specialize workers across continuous workstations, but consumer purchasing volume is too low.
Identifying the constraint prevents confusing operational consequences with structural preconditions.
2
Relate the constraint to established economic principles of specialization
Adam Smith's principle states that 'division of labour is limited by the extent of the market.'
Specialization creates large outputs of standardized goods; if market demand cannot absorb this volume, continuous division of labour becomes economically unviable.

Key Concept

Limitations of Division of Labour (Extent of the Market)
Rate this question

Topics

Division of Labour and Specialization

More questions from this topic