1.2.4 Specialisation

Question 1

When does specialisation occur

Answer 1

When each worker is completing a specific task in a production process

Question 2

How did Adam smith show the division of labour helps firms increase workers productivity

Answer 2

They can take advantage of increased efficiency & lower average costs of production

Question 3

Who can achieve specialisation

Answer 3

Individuals, businesses, regions of countries or countries themselves

Question 4

What are the advantages of specialisation

Answer 4

1. Higher output & potentially higher quality ( since production focuses on what people & businesses are best at.)
2. There could be a greater variety of goods/services produced
3. There are more opportunities for economies of scale, so the size of the market increases
4. There is more competition & this gives an incentive for firms to lower their costs, which helps to keep prices down

Question 5

What are the disadvantages of specialisation

Answer 5

1. Work becomes repetitive, which could lower the motivation of workers, potentially affecting the quality & productivity. ( workers could become dissatisfied).
2. There could be more structural unemployment, since skills might not be transferable, especially because workers have focused on one task for so long
3. By producing a lot of one type of good through specialisation, variety could in fact decrease for consumers
4. There could be higher worker turnover for firms, which means employees become dissatisfied with their jobs & leave regularly