1.1.5: Specialisation & Division of Labour

Question 1

What is specialisation?

Answer 1

• Specialisation refers to producing what a worker, firm or country is most efficient
• eg by focusing on a narrow range of goods/ services

Question 2

Examples of Firms & Countries specialising

Answer 2

• McDonalds: Fast Food
• Ford: Cars (vehicles)
• Saudi Arabia: Oil Extraction

Question 3

Advantages of Specialisation

Answer 3

• Larger range of goods, which reduces the problem of scarcity
• Lowering costs of production as workers are less likely to make mistakes
• Increase in labour productivity, as workers will be quicker and more efficient with their work
• Higher quality of goods, as workers are more skilled; leads to higher international competitiveness with exports; which leads to a country having higher econ growth
• More money retained, as less money and time is spent on training, as workers will only be specialised in a specific task

Question 4

Disadvantages of Specialisation

Answer 4

• Over reliance one one commodity can be risky, this can be affected by bad weather or political instability
• eg Europe’s reliance on Russian natural gas during the Ukraine crisis
• Changing tastes and fashion eg changes from renewable energy to renewable energy
• Many firms in an entire industry may close leading to structural unemployment as the skills of the workers are limited
  -Specialisation will increase the rate of resource depletion, especially if there is specialisation using a country’s own resources

Question 5

What are the 4 functions of money?

Answer 5

• Medium of Exchange: money is accepted in return of goods and services
• Measure of Value: Money is a common unit that can be used to compare the prices of goods and services
• Store of Value: Money can be saved and used in the future
• Method of Deferred Payment: Money can be used to settle debts and future obligations

Question 6

What is division of labour?

Answer 6

• The production process being broken down into separate specialised tasks

Question 7

Advantages of Division Of Labour

Answer 7

• Reduces unemployment, as it creates low skilled jobs
• Higher efficiency, as workers are focused on one task, meaning that they can master it and improve production times
• Quicker training which decreases unemployment

Question 8

Disadvantages of Division of Labour

Answer 8

• If workers lose their jobs, they could face structural unemployment, as they are only trained in one skill
• Task repetition often leads to boredom and a decrease in worker motivation, which can lead to less productivity and/ or poorer manufacturing quality
• It may increase worker turnover rates as workers look to move on to a role that is more stimulating