Division of labour and the functions of money Flashcards
Describe specialisation
Specialisation occurs when each worker completes a specific task in a production process.
Who famously described the concept of specialisation and what did they say
The concept was stated by Adam Smith who showed how worker productivity would increase and by the increased efficiency firms can lower average costs of production.
Advantages of division of labour
higher output and quality since workers specialised,
more opportunity for economies of scale so size of market increases,
more competition giving an incentive for firms to lower costs keeping prices down, less training costs, increases employment
Disadvantages of division of labour
work becomes repetitive lowering motivation and affecting quality and productivity, more structural unemployment since skills may not be transferable, variety for consumer could decrease, higher worker turnover for firms as workers become dissatisfied
4 functions of money and explain two
a medium of exchange (before transactions only occur if double coincidence of wants),
a measure of value (puts value on goods and services (labour)),
a store of value,
a standard of deferred payment (allow debts to be created)
Define divison of labour
Division of labour is the separation of tasks in the production process and their allocation to different groups of workers reducing production and supply costs
Specialisation in the production of goods and services to trade - countries trade ti get the goods and services they are unable to produce, countries can exploit their _____ in a good which means they can
comparitive advantage
produce a good at a lower opportunity cost to another
Absolute advantage occurs when
A country can produce more a good with the same factor inputs
Advantages of specialisation in the production of goods and services to trade
greater world output, gain in economic welfare
lower average costs as competition increases
increased supply of goods
outward shift in PPF
Disadvantages of specialisation in the production of goods and services to trade
Less developed countries might use up their non-renewable resources too quickly
Countries could become over-dependent on the export of one commodity such as wheat. The economy would then suffer if there are poor weather conditions
Production does what
Converts inputs into a final output satisfying consumer needs and wants
Define productivity
output per input (worker) per period of time
