1.1.5 Specialisation and the division of labour Flashcards
What is Production?
A measure of the value of the output of goods and services
e.g. measured by national GDP or an index of production in specific industry such as car manufacturing
What is Productivity?
- A measure of the efficiency of factors of production
- Measured by output per person employed
- Or by output per person hour
What is Specialisation?
The concentration of a worker, firm, region or country to produce a narrow range of goods and services.
What is division of labour?
Division of labour is a type of specialisation where production is split into different tasks and specific people are allocated to each task.
What are the advantages of division of labour?
- Higher productivity and efficiency – e.g. rising output per person hour (better through
repetition and concentrated task). - Training costs reduced if workers are only trained to perform a limited range of tasks.
This leads to lower unit costs leading to higher products
What does specialisation allow an economic agent such as a firm to do?
- Reduce unit costs e.g. through bulk buying
- Improve quality e.g. through better training and skills
- Use technology to increase speed and improve accuracy e.g. production lines
Why would countries, regions, firms and individuals specialise?
- In order to benefit from specialisation
- Enabling them to trade with other economic agents that have specialised in different fields
- Allowing the production possibility frontier to shift outwards
What are the disadvantages of the division of labour?
- Work can be tedious and monotonous
- Poor quality – less output per worker because they are trying to avoid work because
unmotivated
What was the earliest method of exchange?
Barter
What are the four key functions of the development of money?
- A medium of exchange
- A measure of value
- A store of value
- A method for deferred payment
What was the problem with barter?
The problem with barter was that people could only trade if there was a double coincidence of wants: where both parties want the good the other party offers.
Explain the function “A medium of exchange”
- It can be used to buy and sell goods and services and is acceptable everywhere
- Since money can be used to buy all goods and services, everyone will accept money as they know they can use it to buy what they want.
Explain the function “A measure of value”
- It can compare the value of two goods, such as a table and a skirt.
- It is also able to put a value on labour
Explain the function “A store of value”
- It is able to keep its value and can be kept for a long time.
- With barter, goods such as fruits often went out of date and so could not keep their value.
Explain the function “A method for deferred payment”
- Money can allow for debts to be created.
- People can therefore pay for things without having money in the present, and can pay for it later.
- This relies on money storing its value
