CMA Foundation · Fundamentals of Business Economics and Management · Means of Production
According to the standard economic view, the extent to which division of labour can be carried is limited chiefly by:
Division of labour is limited mainly by the size of the market. Specialised, large-scale production is worthwhile only when demand is big enough to absorb the extra output, which is Adam Smith's well-known proposition. Religion, interest rate alone or entrepreneur age do not set this limit.
- AThe size of the marketCorrect
- BThe number of religions in the country
- CThe rate of interest alone
- DThe age of the entrepreneur
Explanation
Specialisation is profitable only if there is enough demand to absorb the large output it generates, so the extent of the market limits it, as stated by Adam Smith. The other options have no direct bearing on how far tasks can be subdivided.
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