Factor mobility, specialisation, division of labour and money Flashcards
What is factor mobility?
Occurs when FOPs can easily be moved from one use to another
What is geographical mobility?
Resources can move easily between regions / areas / countries
What is occupational immobility of labour?
Can occur because of insufficient education and training, a lack of transferable skills, inability to afford training
What is occupational mobility?
Resources can move easily between different types of work
Is land geographically mobile?
No. But it can be occupationally mobile eg: land used for agriculture and housing
What is geographical immobility of labour?
In practice, labour may not be fully mobile because of regional house price variation, family and social ties eg: children in school
Is capital geographically mobile?
Capital can be both occupationally and geographically mobile eg: hand tools or vehicles, but heavy industry capital such as a blast furnance may not be mobile at all
What is specialisation?
The concentration of individuals, firms or nations on producing a limited range of goods or services
What is the division of labour?
A form of specialisation where the tasks needed to produce an item are divided among workers
What are the disadvantages of specialisation and division of labour?
- Higher staff turnover:
workers may find repetitive tasks monotonous and unrewarding, leading to job dissatisfaction
- Dependecy
overreliance on one work/task/factory makes units vulnerable to staff illness or economic shocks
- Structural unemployment
workers trained in fewer skills
machines can replace some labour tasks
- Lack of variety
mass produced goods can reduce consumer choice
What is the connection between Adam Smith and specialisation?
He argued that specialisation leads to increased productivity and economic growth in the Wealth of Nations
What are the advantages of specialisation and division of labour?
- Increased productivity:
greater output from the same resources
allows workers to become more skilled and experienced in specific tasks leading to higher efficiency
develop specialist machinery, more automation
- Lower costs:
reduced training time and waste
- Economies of scale
mass production is possible including assembly lines
larger quantities of identical goods can be produced more efficiently
What is money?
Anything generally accepted in payment of a debt, removes the needs to barter, avoiding the double coincidence of wants
What are the characteristics of money?
- acceptable to all
- portable
-durable
-easily divisible - uncounterfeitable
- scarce in supply
What are the 4 functions of money?
- Medium of exchange:
Money facilitates transactions between buyer and seller, specialisation and the division of labour requires a means of exchanging goods and services which money promotes
- Unit of account:
A nominal unit of measure used to value/cost/price products, assets ,debts, incomes and spending
- Store of value:
An asset that holds value over time
- Standard for deferred payment:
The accepted way in each market to settle debt
