1.1.5 Specialisation and the division of labour

Question 1

Define specialisation and the division of labour (reference to Adam Smith)

Answer 1

As a firm grows and is able to hire more labour, this allows the production process to be broken down into specialised tasks between workers, significantly increasing productivity and output

Question 2

Define specialisation

Answer 2

The process by which production (individual/firm/nation) focuses/concentrates on only one good/stage of production

Question 3

Define the division of labour

Answer 3

Specialisation at the level of the individual worker (the production process is broken down)

Question 4

What are the benefits of specialisation/division of labour to workers? (3)

Answer 4

• allows them to become more skilled in a specific area/task
• being more skilled could lead to higher wages (higher quality, improved efficiency)
• quicker training

Question 5

What are the benefits of specialisation/division of labour to firms? (5)

Answer 5

• improved efficiency/reduced production time
• organisation of production is easier to manage
• improved productivity (more output per unit of input)
• less time/resources needed for training
• higher quality goods/services produced

Question 6

What are the benefits of specialisation/division of labour to nations? (2)

Answer 6

• countries could make surplus for trade
• resource wealth and efficiency gains

Question 7

What are the downfalls of specialisation/division of labour to workers? (2)

Answer 7

• over specialisation: workers may be unable to attain jobs which require other skills/may lead to unemployment
• job dissatisfaction: as a result of repeating the same task continuously (monotonous, boring, lack of motivation)

Question 8

What are the downfalls of specialisation/division of labour to firms? (3)

Answer 8

• can lead to loss of flexibility in the workplace (hard to adapt to changes in trends/in the market)
• the production chain is reliant on previous stages (could increase production time or halt altogether)
• poor quality work due to worker dissatisfaction and lack of motivation

Question 9

What are the downfalls of specialisation to the nation? (2)

Answer 9

• if a resource used in production runs out, they have nothing else to sell
• if another nation is suddenly better at producing your specialised product/if tastes/demands change, you cannot adapt quickly

Question 10

What are the four functions of money?

Answer 10

1) Medium of exchange
2) Measure of value
3) Store of value
4) Measure of deferred payment

Question 11

What are the functions of money designed to do?

Answer 11

They are designed to solve the problem with barter (transactions of exchange between goods and services, not including money)