Advantages & Disadvantages Flashcards
What are the advantages of division of labour?
1) 1 person, 1 task highly skilled in it
2) No time wasting from 1 job to another
3) More choice of jobs for workers
4) Increased output per worker, reducing cost per unit output so living standards increase
5) Less training time on specific tasks
What are the disadvantages of division of labour?
1) Repetition = monotomy & boredom so high turnover of staff
2) Structural unemployment
e. g cashiers replaced with scanning machines
3) Interdependence in production
e. g train drivers/ teachers on 1-day strike, disrupt work of others i.e ticket inspectors or cleaners etc.
What are the advantages of NMW?
1) Reduced exploitation of labour & poverty
2) Reduced wage inequality between men & women
3) Reduced voluntary unemployment as more incentive to work
4) Increased labour productivity as workers more satisfied
What are the disadvantages of NMW?
1) Increased unemployment (excess supply)
- firms find too expensive to employ labour so replaced with capital
2) Increased inflationary pressure
- firms pass extra wage costs onto consumers in higher priced products
3) Ineffective means of reducing poverty
4) Increased red tape/ bureaucracy
- firms leading to higher costs plus reduced flexibility in labour market
- government failure
What are the advantages of indirect taxation?
1) Polluters pay - both producer and consumer
2) Works well with market forces
- internalising -ve externality
3) Pollution level decreases as output decreases & price increases
- MSB=MSC
4) Tax funds raised revenue used to clean environment/ compensate victims
5) Influence public spending
6) Impact income inequality
What are the disadvantages of indirect taxation?
1) Difficult to place monetary value on -ve externalities or decide optimal tax rate
2) Firms relocate to other countries
3) If D inelastic overall reduction in pollution/ external cost may be small
4) Tax revenue raised not used to compensate victims/ environment
5) Encourage illegal markets
What are the disadvantages of carbon offsetting?
1) Voluntary
2) Difficult to regulate/ fraud
3) Hard to obtain accurate measure of emissions
What are the advantages of subsidies (renewable energy)?
1) Reduced air pollution
2) Promotes sustained E.G
3) Consumption of non-renewable resources reduced
4) Help internalise external benefits rom renewable forms of energy
What are the disadvantages of subsidies (renewable energy)?
1) Opportunity cost to gov. subsidies may lead to higher taxes/ cuts in gov. expenditure elsewhere
2) Firms may become inefficient in production if rely on subsidies
3) Wind power less reliable source of energy than fossil fuels
What are the advantages of tradable pollution permits (C-emissions trading)?
1) Market created so price mechanism used to internalise external costs
2) Pollution permits reduced over time
3) Firms production costs increased for those exceeding pollution allowance
- have to purchase additional permits
- source of revenue for cleaner firms selling excess permits
4) Firms have incentive to I clean technology
What are the disadvantages of tradable pollution permits (C-emissions trading)?
1) Allocate too many or too few permits
- little incentive to reduce pollution
- production costs increase
- firms reduced competitiveness
2) Firms pass cost of permit purchases onto consumers
e. g electricity happens mostly when D = inelastic
3) Reduced pressure on major polluting firms to clean up their act as can buy extra permits elsewhere
What are the advantages of extension of property rights?
1) Use market mechanism to allocate resources efficiently
- property owners charge consumer/producer using it
2) Increase property/resources managed carefully ensuring availablity for future generations
e. g fishing in N.Sea reduced
3) Firms damaging environment prosecuted, made to clean up
What are the disadvantages of extension of property rights?
1) Difficult government to extend property rights
e. g Uk part of EU so can fish
2) Difficult to trace source of environmental damage
e. g asbestos compensation not paid as don’t know firm that started it
3) Legal costs in prosecuting polluter extremely high deterring victims from taking action
4) Difficult to place monetary value on property rights
- incorrect payment
e. g chemical leaking payments
What are the advantages of government regulation?
1) Simple
e. g legal restrictions on age limits for tobacco/ alcohol
2) Fine/ close down companies abusing regulations
3) Consumer protection laws offer redress against firms that sell unsafe goods/ false claims about products
4) Reduce problem of asymmetric information
What are the disadvantages of government regulation?
1) Expensive to monitor behaviour of firms
2) Extra costs to firms
e. g installing pollution monitoring equipment
3) Difficult quantify/ attach monetary value to pollution emissions
4) Prevent operation of price mechanism, over-ruling it completely
5) Gov. failure could occur if regs serve to misallocate resources
