1.1.5 Specialisation And The Division Of Labour ✅ Flashcards
Who was Adam smith and what did he talk about?
The father of economics and talked about increase in wealth and productivity.
What is division of labour?
Type of specialisation where production is split into tasks which are allocated to people. (Increases productivity). Higher output per worker.
As people gain significant skill in their task.
Where did Adam smith come up with this idea?
Observation while visiting a pin factory.
What are some advantages of specialisation/division of labour in organising production?
- higher productivity/efficiency (output per person).
- training cost reduced (higher profits).
What are some disadvantages of specialisation/division of labour in organising production? How can this be solved?
- work can become tedious / monotonous.
- this can lead to poorer quality (less output per hour).
- workers are not flexible
Targeting workers to where they are best suited.
Advantages of specialisation/division of labour to trade?
- higher productivity thus lower costs per unit meaning it will be more competitive internationally.
- Increased export means economic growth.
- improved quality of goods makes them more desirable internationally.
- better variety of goods (income from exports used to by imports).
Disadvantages of specialisation/division of labour to trade?
- regional unemployment (structural unemployment effects local areas of an economy). Due to an industry closing.
- breakdown in production process can cause chaos. (Toyota 1997).
- countries become less self-sufficient (struggle when trade suffers).
What is an apposing system to money?
Barter (trading one good for another).
- need double coincidence of wants.
- harder to create future contracts (goods can perish).
What are the 4 functions of money? Explain each?
- medium of exchange. (Intermediary between buyer and seller).
- store of value. (Due to it being stable - most of the time).
- measure of value. (Can be used to value goods).
- standard of differed payment. (can allow future agreements as it is physically long-lasting).
What is commodity money?
Moneys who’s value comes from a commodity which is made.