1.1.5 Specialisation and the Division of Labour Flashcards
define specialisation
when an individual, firm, region or country concentrates on the production of a limited range of goods or services
define division of labour
dividing the production process into a number of tasks and assigning each worker a specific task
which economist explained division of labour and proved the benefits of increased productivity
adam smith
what are the four advantages of specialisation to workers and firms
workers become more skilled at performing a certain task - become quicker at doing the job, increasing productivity. workers can also specialise in the task they are best suited to
workers do not waste time moving from one operation to another, therefore their labour costs per unit are lower as downtime avoided
workers only have to be trained to complete one task, reducing training costs
allows a production line to be used with robotics/machinery allowing workers to complete the work faster and more accurately - boosts output and quality at a lower cost per unit
what are the four disadvantages of specialisation to workers and firms
workers can become bored as work is repetitive and often mundane - higher labour turnover, increasing costs of recruitment or selection OR workers may demand a higher wage to compensate for boredom
specialisation creates interdependence in production. if one group of workers goes on strike, it could halt production across the whole industry
breaking production into different tasks makes it easier to replace skilled workers with machines - this can increase technological unemployment
loss of skills for workers as they are only trained in one task. they are left vulnerable to not finding new work if left redundant, increasing risk of long-term unemployment
what are the four things the impact of DoL/specialisation depends on
how effectively a firm matches a worker’s natural skill and interest to task they are given
extent of technological change in production
how effectively managers can reduce boredom
the type of product
why does the effectiveness of division of labour depend on how effectively a firm matches a worker’s natural skill to the task
if skill does not match task-demotivating, repetitive etc
higher turnover
if opposite is true, greater job satisfaction and productivity
why does the effectiveness of division of labour depend on extent of technological change in production
as more technological change, workers are less reliant in the production process - lower wages, bored, redundant
why does the effectiveness of division of labour depend on how effectively managers can reduce boredom
if manager is effective at reducing boredom, division of labour is more effective and lower turnrover
how can managers reduce boredom
may need to motivate workers through higher wages, rotation of skills, regular breaks
why does the effectiveness of division of labour depend on the type of product
not all products need to be specialised, if it is a product with a simple production process or without a need for high output, there is no need to overcomplicate
describe the natural advantage advantage of specialisation for countries
some countries specialise in the production of certain goods and services that they have a natural advantage in producing.
this allows the country to trade their excess supply and exchange these goods/services for those it does not produce
this enables all countries to benefit from increased output, leading to widening choice and lowering prices
describe the industry advantage of specialisation for countries
specialisation in one product allows an economy to grow around that area of specialisation, boosting jobs in that industry and aids the whole economy
describe the government revenue advantage of specialisation for countries
government revenue (from output, income and trade) more spending on improving living standards e.g infrastructure/education
describe the jobs advantage of specialisation for countries
more jobs as more output may lead to higher demand for workers, increasing incomes
describe the best workers advantage of specialisation for countries
countries specialising in one area may attract the best workers from around the world to relocate to that country, increasing the quality of the good/service
describe the economies of scale advantage of specialisation for countries
investment in that particular area can lead to economies of scale e.g investment into infrastructure like roads and transport links leads to external economies of scale
define external economies of scale
economies of scale that a firm benefits from as a member of an industry or because of its location - available to all firms in an industry regardless of size
describe the reliance disadvantage of specialisation for countries
reliance on a narrow range of products can be risky, if demand falls survival of firms can be threatened, leading to unemployment and economic decline of the area/country
describe the supply problems disadvantage of specialisation for countries
potential supply problems could make the industry redundant e.g dependency on finite resource that is running down
describe the unemployment disadvantage of specialisation for countries
unemployment in declining industry which may make it hard to gain a new job due to skills mismatch (structural unemployment)
describe the externalities disadvantage of specialisation for countries
negative externalities (environmental damage due to over-exploitation of resources/production)
what is barter
a system of exchange by which goods and services are directly exchanged for other goods and services without using a medium of exchange, such as money
what is the problem of bartering
double coincidence of wants - you need to find someone who wants what you have and has what you want, which is inefficient
what are the four functions of money
medium of exchange, store of value, unit of account, means of making a deferred payment
describe money as a medium of exchange
money fulfils the role of being acceptable to both buyers and sellers, removing the need for bartering and allowing people to specialise
describe money as a store of value
money can be saved as wealth so it can be spent later.
what does money as a store of value assume
low inflation over time so value of money is not eroded
describe money as a unit of account
money provides a unit of account by pricing goods and services, allowing comparison between the relative value of products
describe money as a means of making a deferred payment
enables borrowing and lending, someone can borrow money in order to buy a product now and pay later, rather than wait until savings are enough to make the purchase
