3.2 Specialisation, division of labour and exchange

Question 1

What is specialisation?

Answer 1

Occurs when economic units such as individuals, firms, regions or countries concentrate on producing specific goods or services

Question 2

What are the positives of specialisation? (5)

Answer 2

Greater understanding of the requirements of production

Each economic unit can specialise in what they are best at

Efficient use of time as there is no switching between tasks

The increased output can then be exchanged for other goods and services that the economic unit is not as good at producing

Specialisation allows for the exchange of goods and services between the economic units

Question 3

What is a barter?

Answer 3

When goods and services are exchanged for other goods and services, no money involved

Question 4

Why is using money better than a barter? (5)

Answer 4

An intermediary between two parties
Can be kept for future use
Allows us to measure the equivalent value of goods and services in units
It allows to pay at a later date
Don’t have to have other goods and services to trade with

Question 5

What is the division of labour?

Answer 5

The use of specialised workers within an organisation

Question 6

What are the benefits of the division of labour

Answer 6

Repetition of a limited range of activities can increase skill and aptitude, leading to a worker becoming an expert
Reduced time spent moving between different tasks or workstations
As tasks are broken up into smaller ones, it becomes efficient to use specialist machinery.