15 mark corrections pt3

Question 1

Divisions of labour

Answer 1

Breaking down the production process into separate tasks after specialisation. Firms divide up a workforce into specific production lines.

Question 2

Division of labour strengths

Answer 2

Workers are more productive (doing the same thing repeatedly so saves time)
Less training needed for workers (Small amount of tasks needed to master)
Lower prices passed onto customers

Question 3

Division of labour weaknesses

Answer 3

Workers may become demotivated as jobs are repetitive and boring
Workers are at risk of long term structural unemployment if they lose their job as they are specialised
Highly standardised product so unique touch is lost

Question 4

XED

Answer 4

Cross elasticity of demand is how responsive the change in quantity demanded of one good is when the price of another good is change. It shows us if goods are subs(positive), complements(negative) or unrelated (0). %change in Q.D of good a / % change of price in good b

Question 5

XED in context

Answer 5

Subs-A fall in the price of one sub will decrease the demand of the other sub
Complements-A fall in price of one good will increase demand for the other good
Unrelated-they are independent of each other and dont affect the demand of each other

Question 6

YED

Answer 6

Income elasticity of demand is the responsiveness of demand to a change of income. It shows us if goods are inferior(negative), normal(<1) or luxury(>1). % change in demand / %change in income

Question 7

YED in context

Answer 7

Inferior good-Increase in income leads to decreased quantity (cheap clothing)
Normal good-Increase in income leads to an increase in demand (most food and clothing)
Luxury good-An increase income leads to a bigger increase in demand (high end goods)

Question 8

PES

Answer 8

Price elasticity of supply measures how the quantity supplied of a good responds to a change in price. Tells us if it is unit elastic (-1), price elastic (>1) or price inelastic (<1).

Question 9

Price elastic

Answer 9

Smaller change in price leads to bigger % change in quantity supplied. Elastic supply if spare capacity (not at capacity, resources to be used), Long run (more time to adapt) and easy to employ more resources to increase output. e.g. taxi service- easy to wark as a taxi driver and can be offered higher wages to incentivise drivers

Question 10

Inelastic

Answer 10

Change in price leads to a smaller % change in quantity supplied. Inelastic supply if almost at capacity (limited ability to increase supply), running out of raw material (less possible to increase supply), Short run(more restricted with how to expand production)

Question 11

Unit elastic

Answer 11

% change in price is the same as the % change in quantity supplied