2.1 Role of Markets Flashcards
1
Q
Specialisation
A
Where individuals, firms and regions focus on producing what they are best at
2
Q
Division of Labour
A
Where the production process is divided into specific tasks so workers focus on one section and are more efficient
3
Q
Benefits of Specialisation CONSUMERS
A
- Leads to lower prices as productivity increases so cost per unit decreases
- Leads to higher quality good as firms only produce what they are best at
4
Q
Costs of Specialisation CONSUMERS
A
- Lower quality + higher price as workers are bored and unmotivated so productivity falls
- May lead to higher prices as workers require specialised training or higher wages which means cost of production rises
5
Q
Benefits of Specialisation WORKERS
A
- Will lead to higher wages as they have more skill / knowledge
- Due to higher wages, SOL and motivation increases
6
Q
Costs of Specialisation WORKERS
A
- Labour may be substituted for capital as their task is simple and repetitive
- If workers specialise in an industry which ceases to exist then workers may struggle to find jobs as their skills are redundant
7
Q
Benefits of Specialisation FIRMS
A
- Specialisation leads to economies of scale (wage is fixed ) so cost per unit will fall
-Productivity will be higher as workers do not waste time switching tasks - More overall output
8
Q
Costs of Specialisation FIRMS
A
- Workers may become bored so turnover is high
- Workers with specialist skills may ask for higher wages
- As each stage is connected, a failure in one stage means who production process will stop
- There is a cost for specialist training
9
Q
Benefits of Specialisation for Countries
A
- May facilitate international + domestic trade as producers trade surpluses of products
- Higher output leads to more employment and more government revenue
- More employment and higher wage means SOL increases
10
Q
Costs of Specialisation for Countries
A
- Structural Unemployment
