1.1.5 Specialisation And The Divison Of Labour

Question 1

Define Division of Labour

Answer 1

Division of labour is a type of specialisation where production is split into different tasks and specific people are allocated to each task.

Question 2

Explain what Division of Labour does

Answer 2

• Division of labour can raise output per person as people become proficient through constant repetition of a task.
• This is called learning by doing
• Training costs reduced if workers are only trained to perform a limited range of tasks.

Question 3

What is Learning by doing?

Answer 3

• This term refers to the process of acquiring knowledge, skills and expertise through direct hands on experience or practice in a particular activity or industry.

Question 4

What does learning by doing suggest?

Answer 4

• This suggests that individuals, firms or societies can improve their productivity and effectiveness by engaging in repetitive tasks, refining their methods and gaining insights through practical experience.
• For example, in construction, skilled employees with years of experience develop work-flow processes that improve their efficiency, reduce waste and increase their productivity.

Question 5

What is the difference between Production and Productivity?

Answer 5

• Production is a measure of the value of the outputs of goods and services. Eg - measured by national GDP or an index of production in specific industry such as car manufacturing.
• Whereas Productivity is a measure of the efficiency of factors of production. This is measured by output per person employed or by output per person per hour.

Question 6

Would an increase in production cause an increase in productivity?

Answer 6

An increase in production DOES NOT automatically mean an increase in productivity - it depends on how many factor inputs have been employed to supply the extra output.

Question 7

Define Specialisation

Answer 7

This is when individuals, firms, regions or countries concentrate on producing specific goods or services.

Question 8

Explain what Specialisation does in trade

Answer 8

• Specialisation allows an economic agent such as a firm to: Reduce unit costs through bulk buying, improve quality through better training and skills, use technology to increase speed and improve accuracy through production lines.

Question 9

What do countries, regions, firms gain from the benefits of specialisation?

Answer 9

• Specialisation enables them to trade with other economic agents that have specialised in different fields.
• In this case, the production possibility frontier will also shift outwards. This means that specialisation has caused an economic growth for the country.

Question 10

Explain what the wider gains from specialisation are

Answer 10

• Higher output - Total production of goods and services is raised and quality can be improved.
• Variety - Consumers have access to a greater variety of higher quality products.
• A bigger market - Specialisation and global trade increase the size of the market.
• Competition and lower prices - This increased competition acts as an incentive to minimise costs, keep prices down and maximises consumer welfare.

Question 11

What are the disadvantages of Division of Labour?

Answer 11

• Work can be tedious and monotonous.
• Poor quality - This causes less output per worker because they are trying to avoid work because they are unmotivated.

Question 12

What are the disadvantages of Over-Specialisation?

Answer 12

• Regional - unemployment
• Breakdown in the production process can cause chaos for example, Toyota 1997.
• Countries can become less self-sufficient. For example, problem during Covid and Ukraine war.