1.1.5 - Specialisation and division of labour

Question 1

What does production involve?

Answer 1

Production involves turning input into output

Question 2

What is productivity?

Answer 2

Productivity is a way of measuring how efficiently and company or economy is producing its output
It is measured as output per unit of input employed

Question 3

What is the overall productivity ratio?

Answer 3

Total output/ Total input

Question 4

What are the factors of production (inputs)?

Answer 4

Land - Raw materials
Labour - Workforce
Capital - Tools, machinery
Enterprise - risk takers, investing in a new business

Productivity per worker = output produced/ number of workers

Question 5

How is average costs per unit calc.?

Answer 5

Total costs / Output

Question 6

Why has productivity in the UK fallen?

Answer 6

1) Wages have failed to keep up with rising costs so households income have fallen, this creates a lack of incentive to work furthermore less goods and services need to be produced so more workers are inefficient

2) Services like finance retail make up 80% of the UKs economy its harder to increase productivity in these areas.

3) Lack of investment, New tech, machinery buildings and skills easy way to boost the amount that workers can produce. Productivity problem that in the long term lea to more cash for pay rises. Business investment fallen since Brexit. increase costs, lack of stability contribute to this.

Question 7

Why is productivity important?

Answer 7

Economic growth: UK labour productivity is a key factor in determining long run economic growth. An increase in productivity allows firms to produce at lower costs

Inflation: Rising labour productivity helps to keep costs and inflation low.

Rising real wages: Rising labour productivity is a key factor in enabling rising real wages. If workers become more productive firms can afford wage increases.

International competitiveness: improvements in labour productivity can help to boos the competitiveness of UK exports.

Firm itself: Labour costs are a big part of total costs to remain competitive costs are to be kept down. Efficiency and profitability are closely linked to productivity of labour.

Question 8

How can labour quality be improved

Answer 8

1)Specialisation
2)Training to increase skills and qualifications of the workforce
3)Improve the quality of the UK education
4)Increase morale of the workforce
5)Invest in new technology
6) Substitution of capital for labour
7) Improve infrastructure
8) Stronger target settings for workers

Question 9

What is division of labour?

Answer 9

Specialisation by individuals is called division of labour. It occurs where production is broken down into separate tasks. This raises output per person, people become more efficient through constant repetition. They gain productivity this lower costs per unit leading to lower prices for consumers.

Question 10

What are the benefits of specialisation to the business?

Answer 10

-Specialist workers become quicker at producing goods
-Production becomes cheaper per unit because of this
-Higher output. Total production of goods and services rise
-Higher quality.
Each worker can concentrate on what they are best at.
-Reduced training costs if staff only need to complete certain tasks.
-Time saved as the worker is not constantly switching tasks.
-Greater variety of goods and services.
-Increase in global trade.

Question 11

What are the benefits of specialisation to the worker?

Answer 11

-Higher pay for specialised work
-improved skills at the job

Question 12

What are the benefits of specialisation to the country?

Answer 12

-Output increases which leads to improved standard of living.

Question 13

What are the disadvantages of specialisation to the business?

Answer 13

-Lack of flexibility
-Quality may suffer if workers become bored by the lack of variety in their jobs

Question 14

What are disadvantages of specialisation to the workers?

Answer 14

-Boredom due to the repetitive work this lowers motivation and hits productivity
-Their quality and skills may suffer
-May eventually be replaced by machinery
-Workers will move to less boring jobs creating labour turnover.
-Over specialisation can lead to difficulties in finding other jobs which contributes to structural unemployment

Question 15

What are the disadvantages of specialisation to the country?

Answer 15

The country is less self sufficient. They rely on other countries and this makes them vulnerable

Question 16

What is the first function of money?

Answer 16

1: A medium of exchange: Specialisation has enabled people to enjoy a standard of living that would be impossible through self sufficiency. Specialisation requires exchange, obtain things cannot make yourself. Before money used to barter like countries swapping good with each other.

Question 17

What is the second function of money?

Answer 17

2: A measure of value: Money also functions as a unit of account, providing a common measure of the value of goods and services being exchanged. Knowing the value of price of a good in terms of money enables both suppliers and purchaser pf the good to make decisions bout how much of the good to supply and how much of the good to purchase.

Question 18

What is the third function of money?

Answer 18

3: A store of value: In order to be a medium of exchange, money must hold its value over time must be a store of value.
As a store of value money is not unique many other stores exist like land. Money may not be the best because it depreciates with inflation. However money is more liquid than other stores of value because as a medium of exchange it is accepted everywhere easily transported available everywhere

Question 19

What is the fourth function of money?

Answer 19

A standards of deferred payment: Money can be paid at a later date for something we consumer now like borrowing.