The correct option is C. Division of labour needs not take account of the extent of the market. Explanation of the Correct Answer C. Division of labour needs not take account of the extent of the market is NOT true because the effectiveness of division of labour is significantly influenced by the size and scope of the market.

1. Understanding Division of Labour: Division of labour refers to the process of breaking down production into smaller tasks, where each worker specializes in a specific task. This specialization allows workers to become more skilled and efficient in their designated roles.
2. Market Size and Specialization: The extent of the market is crucial because it determines the demand for the specialized products. If the market is small, there may not be enough demand to justify the specialization. For example, if a community only needs a few units of a product, having multiple workers specializing in that product may lead to overproduction and inefficiency. Conversely, a larger market can support more specialized roles, leading to greater efficiency and productivity.
3. Productivity and Efficiency: When the market is large enough to absorb the output of specialized workers, the benefits of division of labour become apparent. Workers can produce more in less time, leading to increased overall productivity. However, if the market is limited, the benefits of specialization diminish, and workers may find themselves underutilized.

Explanation of Why Other Options Are Correct A. Specialization and exchange go hand in hand: This statement is true. Specialization allows individuals or firms to produce goods more efficiently, and exchange enables them to trade their specialized products for others they need. This interdependence fosters economic growth and efficiency. B. Specialization implies that each person produces a surplus of one or a few items (e.g., commodities) in which he is specialized: This statement is also true. When individuals specialize, they focus on producing a limited range of goods or services, which often leads to a surplus of those items. This surplus can then be exchanged for other goods, facilitating trade and economic interaction. D. Division of labour results in increased productivity: This statement is true as well. By dividing tasks among workers, each worker can focus on a specific task, leading to greater efficiency and faster production times. This increase in productivity is one of the primary benefits of division of labour. Common Pitfalls

• Assuming Market Size is Irrelevant: A common misconception is that division of labour can be effective regardless of market size. In reality, without sufficient demand, specialization can lead to inefficiencies.
• Overlooking the Balance of Specialization: While specialization can increase productivity, too much specialization can lead to a lack of flexibility in the workforce. If market conditions change, highly specialized workers may struggle to adapt.
• Neglecting the Role of Exchange: Some may underestimate the importance of exchange in a specialized economy. Without a system for trading goods, the benefits of specialization cannot be fully realized.

Revision Summary

• Division of labour is influenced by market size; a larger market supports more specialization.
• Specialization leads to increased efficiency and productivity, allowing for greater output.
• Exchange is essential for the benefits of specialization to be realized, as it allows for the trade of surplus goods.
• Beware of over-specialization, which can lead to inflexibility in the workforce and inefficiencies if market conditions change.