A medium-scale palm oil processing enterprise in Ondo State planned to reorganize its production plant into five highly specialized units, with each worker restricted to a single repetitive sub-task. However, management abandoned the plan after realizing that local consumer demand was too small to absorb the massive daily output that would be produced. Which factor primarily limited the application of division of labor in this firm?
- The extent of the marketCevap
- BThe onset of diminishing marginal returns in production
- CThe geographical localization of agricultural processing firms
- DThe misclassification of fixed capital as variable production costs
Cevap
The extent of the market is the fundamental constraint limiting division of labor in this firm.
According to economic theory, division of labor leads to mass production. For specialization to be economically viable, there must be a sufficiently large market (demand) to absorb the large volume of goods produced. When the market is small or limited, producing in large quantities creates excess unsold inventory, making division of labor impractical.
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Anahtar Kavram
Limitations of Division of Labor: Extent of the Market