business activity

Question 1

why is specialisation common

Answer 1

• availability of specialised machinery and technology
• increased competition means production cost must be kept low
• higher living standards obtained

Question 2

advantages of division of labour

Answer 2

• less time wasted moving between workbenches
• quicker and cheaper to train employees
• increased efficiency and output

Question 3

disadvantages of division of labour

Answer 3

• workers may get bored so efficiency may fall
• if one worker is absent and no one can fill in production might be stopped
• if the worker becomes very skilled they may be recruited by or move to other firms

Question 4

why added value is important

Answer 4

• if the costs are less than the added value then a profit can be made
• other expenses like wages, management, advertising etc. can be paid for

Question 5

ways to add value

Answer 5

• increase selling price but keep costs low: increased profits, may give impression of goods being high quality, but other costs may increase in this process, demand and sales may fall
• decrease costs but keep selling price same: increased profits, demand not risked, but compromised quality