(a) Two limitations of division of labour are:
1. Size of the market—Division of labour increases total output by increasing the efficiency of labour. However, if the increased output cannot be marketed (i.e. if there is insufficient demand for the commodity in the market) the division of labour will not be profitable for the producers.
2. Nature of the Product—The nature of the good that is being produced also limits the extent of division of labour, e.g. if the production of a good requires creative effort (a sculpture or a painting), it is difficult to introduce division of labour in the production process.
(b) S1 is a perfectly inelastic supply curve i.e. price changes supply does not change. Since, price changes with time, along S1 supply curve, supply remains unchanged, in comparison to time, whereas, S3 is a relatively elastic supply curve. It means supply changes more than the changes in price. Now, as price changes with time, along S3, supply also changes with time.