LS5 - Specialisation and the Division of Labour Flashcards
What is specialisation?
When production is concentrated on a limited number of goods and services
What is the division of labour?
The specialisation of specific workers on specific tasks within the production process
What are the advantages of the division of labour for workers?
Workers can become more skilled at their jobs due to repetition
Time is saved for the workers as they have less tasks to do
What does increased productivity lead to?
Higher output and higher quality
Higher living standards
More efficient use of resources
What are the advantages for division of labour for firms?
Workers are easier and cheaper to train
Workers become more productive so overall output and quality increases
What are the disadvantages of division of labour?
Repetition of tasks can lead to boredom and drop in morale
Simplified job tasks can lead to a drop in pride for workers
What are the advantages of specialisation?
More efficient use of scarce resources, more trade with other countries, more growth and higher living standards, higher output, higher quantity and quality, more economic growth
What are the disadvantages of specialisation?
Overreliance on few industries is risky
Increased interdependence can lead to a reduce in self - sufficiency
What are the functions of money?
Medium of exchange, measure of value, store of value, method of deferred payment
What is Medium of Exchange?
Bartering by trading goods and services for other goods and services
What is Measure of Value?
Assigning a value / price of a product and buying / selling it using a form of currency
What is Store of Value?
A good which keeps its value which you can then resell after buying the good few years earlier
What is Method of Deferred Payment?
Paying something in staggered amounts from your income as you cannot afford all of the money at one time
What is a unit cost?
The average cost to produce a unit of output
What is the equation to calculate unit costs?
Total Production Costs in Period / Total Output in Period
What can lower unit costs lead to?
More profit Higher wages Lower prices More investment More innovation
What is causing specialisation to increase between nations?
Globalisation
What was Adam Smith’ s ideology?
That if workers were specialised and they all did different tasks, then productivity would increase much more
(1 worker - 20 pins, 10 workers - 48000 pins)
What is productivity?
Output per unit of input employed
What is labour productivity?
The amount of output per worker
What is capital productivity?
Output per unit of capital employed
What counters the store of value?
Inflation or hyperinflation
What is cash?
Notes and coins, which are tokens with no intrinsic value that have been accepted by the government as law
Explain money that is in current accounts?
Money in current accounts can be withdrawn on demand if it is on credit. Cheques and debit cards are used to purchase goods and services.
What are the disadvantages of money in current accounts?
People can reject payment of debit cards and cheque books, and little or no interest can lead to a loss of money due to inflation
Is a cheque book medium of exchange or measure of value?
Medium of exchange
What are near monies?
Assets which can be used as measure of value or store of value but not as medium of exchange, but they are easily convertible to medium of exchange.
What does liquidity mean?
How easily something can be converted into money without a loss of value
What are non-money financial assets?
Financial assets which can be converted into money, but there would be penalties for doing so and it would be time consuming
What are money substitutes?
Objects which can be used instead of money, such as credit cards or charge cards
What does illiquid mean?
An asset that is difficult to convert into cash
What is hyperinflation?
A very fast increase in prices which would damage a country’s economy
