4.2 Specialisation, Division Of Labour And Exchange Flashcards
What is specialisation?
A worker performing one task of a narrow range of tasks
(Also different firms specialise in producing different goods and services)
What is division of labour?
Different workers perform different tasks in the course of producing a good or service
(Goes hand in hand with specialisation)
What did Adam smith say about factory output?
It could be increased if workers specialised at different tasks in the manufacturing process
According to Adam Smith,
What are the three reasons why a factory’s total output can be increased if workers perform specialist tasks rather than attempting to do all of the tasks
- Time will be saved as a worker will not have to switch between tasks
- More and better capital machinery will be employed
- Worker will become more efficient and productive at the task they are doing (practise makes perfect)
(However this could be a disadvantage if it creates boredom among workers
What is trade?
The buying and selling of goods and services
What is an exchange?
To give something in return for something els received.
(Money is a median of exchange)
What is a system of trade and exchange essential for?
Specialisation to be economically worthwhile for those taking part in the division of lanour
Why is trade and exchange important for this?
Workers who completely specialise cannot enjoy a reasonable standard of living if forced to to consume only what they produce
What does a successful barter require(e.g farmer and a blacksmith)
“Double coincidence of wants”
-farmer must require services of blacksmith and the blacksmith must want the wheat from the blacksmith
Why is barter an extremely inefficient form of exchange in Morden economies?
-vast number of goods are produced so barter holds back the economy
Why is using money more efficient than bartering?
There is no need for the “double coincidence of wants.
What is capital deepening?
Investing in new technology
What is capital widening?
Employing more of the same capital
What did Adam smith use to back up his point of specialisation being more efficient?
A pin factory
Why did Adam smith use a pin theory to back up his point of specialisation?
-person who was not skilled at making pins would make less than one in a day
-person who carries out 18 distinct tasks makes less than 1
-however if 18 tasks given to 18 people they can specialise
-the specialisation would allow upwards of 48,000 pins being made a day as a person could improve their skills in that one area making them more efficient
