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Division of labour

The division of labour occurs where the production process is broken down into many separate tasks.

Division of labour can raise output per person as people become proficient through constant repetition of a task.

This is called learning by doing.

This gain in labour productivity then helps to lower the supply cost per unit for a business.

Reduced supply costs in theory will then lead to lower prices for consumers of goods and services causing gains in economic welfare through an increase in consumer surplus.

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