Barney Oats Co produces 5 varieties of flavored oats. A market survey done by the company revealed that its competitor Sloan co. had a larger share in the market. It was found out that Barney's share of output was one-tenth that of Sloan Co Immediately

Question

afterward, the CEO of Barney Oats decided to reduce the number of flavors and reassign tasks to workers based on their skills. Will the manager's decision increase the output of Barney Oats? Give reasons to support your answer.

Answer 1

Barney Oats' output will increase because of division of labor. When the tasks involved with producing a good or service are divided and subdivided, workers and businesses can produce a greater quantity of output. Specialization in a particular small job allows workers to focus on the types of production where they have an advantage. People have different skills, talents, and interests, so they will be better at some jobs than others. Workers who specialize in certain tasks often learn to produce faster and better. A similar pattern often operates within businesses. In many cases, a business that focuses on one or a few products is more successful than firms that attempt to make a wide range of products. Specialization also allows economic entities to take advantage of economies of scale—for many goods and services, as the level of production increases, the average total cost of producing each individual unit often declines.