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Specialization and the Division of Labor, Advantages of Specialization

diseconomies of scale, commercial bakery, industrialized nations, economies of scale, crater

By specializing in what they produce, workers become more expert at a particular part of the production process. As a result, they become more efficient in these jobs, which lowers the costs of production. Specialization also makes it possible to develop tools and machines that help workers do highly specialized tasks. Carpenters use many tools that plumbers and painters do not. Commercial bakeries have much larger ovens and mixers than those used by people who only bake bread and pies once a year. And unlike a household kitchen, a commercial bakery has machines to slice and package bread. All of these tools and machines help workers and businesses produce more efficiently, and lower the cost of producing goods and services.

The advantages of specialization have led to the creation of many very large production facilities in the United States and other industrialized nations. This trend is especially prevalent in the manufacturing sector. For example, many automobile factories produce thousands of cars each day, and some shipyards employ more than 10,000 workers. One open-pit mine in the western United States has dug a crater so large that it can be seen from space.

When the market for a product is very large, and a company can sell enough goods or services in that market to support a very large production facility, it will often choose to produce on a large scale to take advantage of specialization and division of labor. As long as producing more in larger facilities lowers the average costs of production, the producer enjoys what are known as economies of scale.

But bigger is not always better, and eventually almost all producers encounter diseconomies of scale in which larger plants or production sites become less efficient and more costly to operate. Usually that happens because monitoring and managing increasingly larger production facilities becomes more difficult. That is why most large manufacturers have more than one factory to make their products, instead of one massive facility where they make everything they produce. In recent years, many steel companies have found it more efficient to build and operate smaller steel mills than they once operated.

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