Final answer:
The concept referred to where work is divided for each person to specialize in is known as Division of Labor, credited to economic theorist Adam Smith, who observed its profound impact on productivity in a pin factory.
Step-by-step explanation:
The concept where work is divided so that each person performs a specialized portion of the work is called Division of Labor. Adam Smith, a prominent figure in the field of economics, introduced the idea of dividing labor into discrete tasks. He observed that specialization and the division of labor in a pin factory led to a significant increase in production. A single worker might only make 20 pins a day, but a team of 10 workers, each focused on specific tasks, could produce up to 48,000 pins in a day. This increase in production due to the division of labor is attributed to three main reasons: improved dexterity in specialized tasks, time saved that would otherwise be lost in switching between tasks, and the invention of specialized machinery and tools that aid in efficiency.