Economics of Specialisation Flashcards
What is the division of labour
When the production process is split up into smaller tasks and workers are assigned to these smaller tasks
What is specialisation
Specialisation is when we concentrate on a product or task
How does specialisation affect efficiency and why
Specialisation increases efficiency as the specialist repeats the same action constantly,building familiarity
Advantages of division of labour
-Increased output due to increased efficiency
-improved quality due to mastery of skills
-decreased unit costs because the same worker,working the same hours,produces more
-Saves on training costs
Disadvantages of division of labour
-Boredom of doing same task leads to demotivation and eventually decreased productivity and quality
-Boredom can lead to absenteeism and also cause workers to quit (increasing employee layover)
-Costs for firms might increase because they will have to hire new employees and have to train them
-It will be hard for employees to find new job if they are only specialised in just one skill
What are the 4 functions of money
- Medium of exchange
- Unit of account (put a price on things)
- Store of value (can be physically stored or saved in an coount)
- Deferred payment (being able to buy now and pay later)
What is bartering
When one good is exchanged for another in the absence of money
What is specialisation in trade
When different parties who specialist in one particular things take part in trade between one another
Advantages of specialisation in trade
-Increased variety in products
-increased output,due to higher efficiency
-Increased trade because if you are only specialised in just one task,you must trade with others to get other products you may need
Disadvantages of specialisation in trade
-Over-specialisation makes it difficult for employees to find new jobs,leading to mass unemployment
-If a country specialises in natural resources,their reserves may become depleted in the future
-Due to a chance of strikes,it makes people vulnerable
