Final answer:
Outsourcing production is a strategy used by companies to overcome capacity constraints by contracting outside sources, often in other countries, to perform tasks originally done internally.
Step-by-step explanation:
Outsourcing some production is a means of overcoming a capacity constraint. When a company faces limitations in production, often due to the scarcity of resources or labor, it may choose to outsource. By hiring an outside contractor, sometimes abroad, to perform tasks that were once done internally, companies can effectively mitigate these constraints. This process allows businesses to bypass the capacity limits in their home country by leveraging the resources and labor available in other markets, often at a lower cost.
Offshoring refers to the process of moving some of a company's operations overseas in order to access cheaper labor markets. This, combined with outsourcing, enables companies to expand their production capacity beyond the immediate restrictions they face domestically. The practice of polarization, where the differences between low-end and high-end jobs increase, can also affect the labor market and structurally shape employment opportunities and constraints.