CH5 Specialisation and the division of labour Flashcards
What does specialisation and division of labour give rise to?
gives rise to large gains in productivity
What are the 3 sectors the economy can be divided into? what else can it also be divided into?
-primary sector, secondary sector and tertiary sector
-it can also be divided between the state sector and private sector
why do markets exist?
for buyers and sellers to exchange goods and services using barter or money
What are the four functions money has?
-medium of exchange
-a unit of account
-a store value
-a standard for deferred payment
what is specialisation?
it is the production of a limited range of goods by an individual or firm or country in co-operation with others so that together a complete range of goods is produced
Can specialisation occur between nations? Give an example and what is intensifying this process of specialisation?
yes
-for example, a country like Honduras produces bananas and trades those for cars produced in the United States.
-globalisation is intensifying this process of specialisation between nations.
can specialisation occur within economies?
yes
-for example, in the UK, Cornwall specialises in tourism whilst London specialises in financial services
What is specialisation by individuals called?
specialisation by individuals is called the division of labour
what is productivity ?
output per unit of input
what is labour productivity?
output per worker
what is capital productivity?
output per unit of capital employed
What are the advantages of division of labour (4)
1) it enables workers to gain skills in a narrow range of tasks. These skills enable individual workers to be far more productive than if they were jacks-of-all-trades. In a modern economy a person could not possibly hope to be able to take on every job which society requires
2) the division of labour makes it cost-effective to provide workers with specialist tools. For instance, it would not be profitable to provide every farm worker with a tractor. But it is possible to provide a group of workers with a tractor which then can then share
3) time is saved because a worker is not constantly changing tasks, moving around from place to place and using different machinery and tools
4) workers can specialise in those tasks to which they are best suited.
What are the disadvantages of division of labour?
-if jobs are divided up too much the work can become tedious and monotonous. Workers feel alienated from their work. This will result in poorer quality of work and less output per person.
-the workers will do anything to avoid work - going to the toilet, lingering over breaks and reporting sick for instance.
What are the disadvantages of over-specialisation?
-if the industry fails it leads to increase in unemployment. E.g. the north of England, Wales, Scotland and Northern Island have suffered high unemployment since the 1950s as their traditional heavy industry, such as coal mining and shipbuilding, declined and was not replaced by enough new service sector jobs.
-Another problem is that a breakdown in part of the chain of production can cause chaos within the system and result in the whole system having to stop. This will then result in less output and potentially less profits too.
What are the three main sectors which economies are structured into?
-primary sector: this is where raw materials are extracted and food is grown. E.g. fishing, oil extraction
-secondary sector: also known as manufacturing sector, this is where raw materials are transformed into goods. E.g. food processing, furniture making
-tertiary sector: also known as the service sector, this is the sector that produces services such as transport, sport and leisure, financial services etc
what do most firms do in regards to the sectors?
-most firms tend to operate in just one of these sectors.
-some very large firms, such as BP, operate across all three sectors, from the extraction of oil to its refining and sale to the public through petrol stations
What are the two other sectors economies can also be split into?
-the public sector: this is the state or government sector of the economy
-the private sector: the part of the economy owned by private individuals, companies and charities
What are markets?
markets are where buyers and sellers meet
what are the different places buying and selling can take place?
-online, in newspapers and magazines, through mail order or over the telephone.
what is a market?
-a market is any convenient set of arrangements by which buyers and sellers communicate to exchange goods and services.
What is a sub-market?
-this is a term used to describe a market within a larger market. E.g. the market for diesel fuel in the UK is a sub-market of the market for all oil-based fuels in the UK. Equally, the market for all oil-based fuels in the UK is a sub-market of the international market for fuels
what do many Western economists argue about specialisation, exchange, and the market?
many western economists argue that specialisation, exchange and the market lie at the heart of todays economic prosperity in the industrial world.
-However, whilst it is likely that the market system is a powerful engine of prosperity, we shall see that it does not always lead to the most effective allocation of resources.
what has specialisation enabled people to enjoy? however, what does specialisation necessitate?
-it has enabled people to enjoy a standard of living which would be impossible to achieve through self-sufficiency.
-Specialisation, however, necessitates exchange. Workers can only specialise in refuse collecting, for instance, if they knew that they will be able to exchange their services for other goods and services such as food, housing and transport
what has exchange for most of history meant?
-it has meant barter - swapping one good for another.
-however, barter has many disadvantages and it would be impossible to run a modern sophisticated economy using barter as a means or medium of exchange
-it was the development of money that enabled trade and specialisation to transform economies into what we know today