Final answer:
Fayol's division of labor refers to the specialization of tasks within an organization, which increases efficiency and productivity. Option C is correct.
Step-by-step explanation:
According to Fayol, the division of labor states that functions within an organization should be divided into areas of specialization. This principle is based on the idea that when employees specialize in a limited set of tasks, they become more skilled and efficient in those areas, leading to higher productivity and quality work. An example of division of labor is seen on assembly lines in factories where each worker is responsible for a specific part of the manufacturing process, hence increasing the overall efficiency and effectiveness of production.