1.1.5: Specialisation And The Division Of Labour Flashcards
What is specialisation?
The focused production of a limited range of goods by a firm/country.
What is the division of labour?
The specialisation of labour in a particular part of a production process.
What did Adam Smith believe in?
The efficiency of a pin factory increases (5,000 pins per hour) when workers specialises in a particular part of the (18 part) pin production process.
What is production?
The process of making products from raw materials.
What is productivity?
The rate of output of workers per hour.
Does an increase in production mean an increase in productivity?
No: it depends on how many factor inputs have been employed to supply the extra output.
What are advantages of specialisation in the production of goods?
-Less training time: the division of labour gives workers time to gain skills for one particular job.
-Higher productivity and efficiency: firms can be more efficient when producing on a large scale.
What are disadvantages in specialisation in the production of goods?
-Boredom: the division of labour can make jobs repetitive.
-Inflexiblity: on an assembly line, if one person is absent, the whole production line may slow down.
What are advantages of specialisation in international trade?
-Improved Productivity: countries don’t have to produce every good they need, which would be impractical for developing countries.
-Comparative Advantage: countries can make use of their best resources (e.g. low labour costs in India & China, advanced technology in Germany).
What are disadvantages for specialisation in international trade?
-High interdependence will cause problems if trade is prevented (e.g. war).
-Countries may become over-dependent on one particular export and if this fails their economy may collapse.
What is money?
A medium of exchange between two parties.
What are the 4 main functions of money?
•Medium of exchange (accepted universally for payment).
•Unit of account (money measures the relative worth of goods).
•Store of value.
•Standard of deferred payment.
What is a barter economy?
A cashless economic system in which goods & services are traded at negotiated rates.
What is a problem with bartering?
People can only trade is there was a double coincidence of wants (when both parties want the good that the other party offers).
