In his book The Wealth of Nations, Adam Smith employed the example of a pin factory in order to explain what economic concept?
A)the relationship between the marginal and average product of labor
B)the law of diminishing returns
C)why no firm would want to hire so many workers as to experience a negative marginal product of labor
D)the division of labor

Question

Quizplus · Accepted Answer

Adam Smith used the example of a pin factory to illustrate the concept of division of labor, which refers to the specialization of tasks among workers that leads to increased efficiency and productivity in a firm. In the example, each worker in the pin factory specialized in a particular task, such as straightening wire or sharpening points, which allowed the factory to produce significantly more pins than if each worker had tried to complete the entire pin-making process themselves.

In His Book the Wealth of Nations, Adam Smith Employed