The division of labour and specialisation explains _________.

Question

Quizplus · Accepted Answer

The division of labour and specialisation allows workers to focus on specific tasks, leading to an increase in efficiency, which results in a rise in the marginal product of labour as the firm hires its first units of labour. As more workers are hired and the firm reaches the point of diminishing marginal returns, the marginal product of labour eventually starts to decrease, leading to a fall in the average product of labour (B). The use of more workers when the marginal product of labour is negative would result in a decrease in output, making it unprofitable for firms (D). The relationship between the marginal product of labour and the average product of labour is that both rise when the marginal product of labour increases, but this is not solely explained by the division of labour and specialisation (A).

The Division of Labour and Specialisation Explains _________