Question

The division of labour is limited by the extent of the [blank].

Answer 1

The division of labor is limited by the extent of the market   ( Answer )

This statement was mentioned by Adam Smith in his famous book Wealth of Nations.

According to this statement, when the market is very small, not many people will have the encouragement to dedicate themselves to one particular employment.

It is because, for them, specializing in a specific job will not allow them to enjoy a wide range of goods and services as the economy itself is too small.

In contrast, when the market is large, people will have the encouragement to dedicate themselves to one particular employment.

It is because they know that, even if they specialize in their respective work, they will still be able to access a wide range of goods and services.

Hence, we can clearly say that the division of labour gets limited by the extent of the market.