1.1.7 Specialisation and the division of labour Flashcards

1
Q

Specialisation

A

Where workers are assigned specific tasks within a production process.

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2
Q

Examples of specialisation
[Global level]

A

Brazil with coffee

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3
Q

Examples of specialisation
[National level]

A

Silicon Valley with technology

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4
Q

Examples of specialisation
[Firm level]

A

Factory workers won’t work as salespeople

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5
Q

Examples of specialisation
[Household level]

A

Father stays at home whilst mother works

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6
Q

What was Adam Smith’s pin factory?

A

Adam Smith visited a pin factory. He said that one untrained worker wouldn’t even be able to make 20 pins per day, but 10 workers, specialising in different tasks, could make 48,000.

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7
Q

How does specialisation increase productivity?

A

Where workers are assigned specific tasks within a production process.Concentration increases efficiency. Over time, if production is divided, each employee increases their productivity.

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8
Q

What is productivity?

A

Output per worker

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9
Q

When does specialisation work best?

A

Specialisation works best when mass producing a certain good.

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10
Q

What happens to the price of good if specialisation is used in the production process?

A

The more people specialise, the cheaper the goods will be produced (as firms can benefit from economies of scale as average costs are low).

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11
Q

Division of labour

A

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

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12
Q

Advantages of specialisation

A
  • Better quality products
  • Higher output of products
  • More efficient production and increased productivity (if resources are used more efficiently, more output can be produced per unit of input.)
  • Firm can achieve economies of scale
  • Increased profit for firms, and therefore increased tax revenue for the government.
  • Workers become particularly skilled in a particular task
  • Better use of scarce resources.
  • Training costs are reduced if workers are only trained to perform certain limited tasks.
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13
Q

Disadvantages of specialisation

A
  • Workers can end up doing repetitive tasks, which can lead to boredom.
  • Severe knock-on effects if one part of production isn’t functioning (e.g. broken machine or human error).
  • Potentially more automation.
  • Countries can become less self-sufficient, which can be a major issue if trade is disrupted.
  • Lack of flexibility – e.g. if the companies eventually more elsewhere, the workforce left behind can struggle to adapt.
  • Fewer transferable jobs . – e.g. Miners in the UK could not find work after the mines closed.
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14
Q

What does specialisation mean that countries have to do?

A

**Trade becomes vital **– economies have to be able to obtain the things they are not making for themselves. This means it is necessary to have a way of exchanging goods and services between countries.

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15
Q

What is the most efficient way of exchanging goods and services?

A

Money

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16
Q

What are the functions of money?

A

1) Medium of exchange (accepted as a payment for goods)
2) Measure of value (a good can be assigned a monetary value)
3) Store of value (money will hold a similar value)
4) Standard of deferred payment (money can be used to pay back debt)

17
Q

What is the most important function of money?

A

The medium of exchange - (it allows trade to happen).

18
Q

What is a barter economy?

A

An economy where goods are traded directly rather than through the medium of money.

19
Q

Why are bartering economies inefficient?

A

It takes a lot of time and effort to find traders to barter with.

It also involves a double coincidence of wants, meaning both parties want the good that the other party has.

20
Q

When has bartering been used in the past?

A

In the Stone Ages - when money wasn’t created.

When hyper inflation occured in the past (and the value of money became worthless). In these cases, people resort to bartering goods directly – as seen in Germany 1922-1923.

21
Q

Advantages of a barter economy

A
  • It is a way to avoid transaction costs
  • May be more emotionally satisfying to swap physical goods (e.g. football players)
22
Q

Limitations of a barter economy

A
  • It becomes difficult to produced specialised goods only wanted by a small proportion of the population.
  • Indivisibility of some goods/services – it is harder to swap a cow if it was worth 10,000 eggs.
  • Season – e.g. a farmer who has most of their crop coming out in September may not be able to store it for later in the year.
  • No way to store wealth
  • Difficult to judge the true value of a good/service
23
Q

What are the types of money in a modern economy?

A
  • Cash
  • Money in current accounts
  • Near monies (Money which can be converted into cash. E.g. assets such as houses)
24
Q

Key attributes of money

A
  • Durable
  • Divisible
  • Consistent
  • Convenient
  • Generally accepted