1.1.5

Question 1

Specialisation

Answer 1

Occurs when each worker completes a specific task in a production process - Adam smith
Firms can lower average costs if production and increase efficiency
Smith essentially said that by dividing the production of pins into 18differnet tasks

Question 2

Advantages of specialisation

Answer 2

• higher output/ higher quality
• there could be a greater variety if goods and services produced
• more opportunities for economies of scale, size of market increases
• more competition, gives incentive for firms to lower their prices

Question 3

Disadvantages of specialization

Answer 3

• work becomes repetitive, lower motivation and affect quality/quantity
• structural employment
• variety could decrease
• higher worker turnover

Question 4

The functions of money

Answer 4

• a medium of exchange
• a measure of value
• a store of value
• a method of deferred payment