1.1.5 specialisation and division of labour Flashcards
specialisation (def.)
the production of a limited range of goods by a firm/individual/country
division of labour (def.)
when labour becomes specialised in a particular part of the production process
what did adam smith believe?
the concept of specialisation and the division of labour and showed how it can increase labour productivity (output per worker), allowing firms to increase efficiency and lower costs of production
specialisation and division of labour in production adv.
higher labour productivity = lower cost/unit
lower costs = lower prices for consumers
lower costs = higher profit margins = higher wages for workers
creates may low-skilled jobs
specialisation and division of labour in production dis.
tasks are repetitive = decrease in worker motivation = less productivity and poorer quality
increased staff turnover
mass produced products lack variety
if workers lose their jobs, its hard for them to find another as they are only trained in one skill
specialisation and division of labour in trade adv.
goods are more competitive internationally (exports)
increased exports = economic growth for the nation
economics growth = higher income and a better standard of living
income gained from exports can be used to purchase other goods from around the world (imports) = more variety of goods available in a country
specialisation and division of labour in trade dis.
some industries cannot compete internationally = may go out of business
many firms in an entire industry may close = structural unemployment
may create over-dependency on other countries
increased rate of resource depletion
what are the functions of money?
a medium of exchange : can be used to buy and sell goods everywhere
a measure of value : can compare the value of two goods
a store of value : able to keep its value and can be kept for a long time
a method of deferred payment : can allow for debts to be created
