Who benefited the most from the domestic system during the early stages of industrialization, and why?

• A. Rural workers, because they had complete autonomy over their production and could set their own prices.
• B. Neither group benefited, as the domestic system was inefficient and unprofitable for all involved.
• C. Both merchants and rural workers benefited equally, as profits were shared fairly between them.
• D. Merchants, because they controlled the supply of raw materials and set the prices for finished goods.

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the domestic system, also known as the putting-out system, which was a production method where merchants supplied raw materials to rural workers who produced finished goods at home.
2. Step 2: Identify the roles of the two main groups involved: merchants controlled the distribution of raw materials and the market for finished goods, while rural workers performed the labor-intensive production tasks.
3. Step 3: Analyze the power dynamics: merchants had control over prices and supply, giving them leverage to maximize profits, whereas rural workers had limited bargaining power and often accepted lower wages.
4. Step 4: Consider the economic incentives: merchants benefited from controlling the entire production chain and setting prices, while rural workers had less autonomy and earned income primarily from wages, not profits.
5. Step 5: Conclude that merchants benefited the most because their control over raw materials and pricing allowed them to capture the majority of the economic gains during the early industrialization period.