1.1.5 Specialisation and the division of labour Flashcards
what is specialisation
each worker completing a specific task in a production process
what did adam smith do
argued that specialisation in the labour force led workers to becoming expertsin their field
what are the advantages of specialisation and the division of labour in organising production
increased output, less wastage, and lower unit costs
what are the disadvantages of specialisation and the division of labour in organising production
increased boredom, overreliance, finite resources, and changing tastes
what are the 4 functions of money
- medium of exchange
- measure of value
- store of value
- method of deferred payment
what is a medium of exchange
any item that is widely acceptable in exchange of goods/services
what is a measure of value
helps in determining the velue of a good/service
what is a store of value
an asset, commodity or currency that can be saved, retrieved and exchanged
what is a method of deferred payment
getting things without paying for them in the present but paying for it in the future, this relies on money storing its value
what is division of labour
production being broken down into many seperate tasks so workers can be assigned to specific tasks
what is a barter
the direct exchange of goodsa nd services without using money
what is money
a commodity accepted by general consent as a medium of economic exchange
what are the advantages for a country specializing in goods and services to trade
allows a country to make full use of their economic resources
increases the scale of production – leads to lower costs and prices
surplus can be exported, an injection into the circular flow of income
what are the disadvantages for a country specializing in goods and services to trade
world prices for a product might fall leading to declining revenues
risk of over-specializing and structural unemployment
might lead to over-extraction of a country’s natural resources
