Micro-Measuring economic performance: Specialisation Flashcards
What is specialisation?
The concentration of production on a narrow range of goods and services in a country/Regions/firms/workers. Focusing attention on producing a certain good/service
What are the benefits of specialisation?
- High output/ maximising output- increase trade and growth
- A wider range of goods/services
- Greater allocative efficiency
- Higher productivity through better use of works
- Quality improvements
Explain the benefits/consequences of higher output
-resources are purely focused on efficient production
-inefficient production will stop diverting the resources to efficient production
-trade ( mutually beneficial) will increase as a country will need to import what they aren’t efficient production in producing and export what they aren’t efficient in producing.= good allocation of resources & max output-> export revenue increases-> GDP increases-> income increases
Explain the benefits of a wider range of goods and services
Dyson within narrow focues they can have a wide range within their focus
Explain the benefits of greater allocative efficiency
overcome the problem of scarcity as resources will go to the most efficient place and be diverted to the less efficient place=> maxing output satisfying as much consumer demand a possible
Explain the benefits of higher productivity of workers
-works are used better/ to their max productive potential.
- This decreases the cost of production to firms
What are the disadvantages of specialisation?
- Finite resources
- Changes in fashion/tastes
- De-industrialisttion
- National interdependence
Explain the disadvantages of finite resources
company/country which are overspecialized and requires a certain input e.g crude oil if oil is depleted the company could go under
Explain the disadvantages of changes in fashion/trends
Over-specialised businesses which haven’t diversified may be in danger if a consumer moves away from their product
Explain the disadvantages of de-industrialisation
Foreign countries/firms become more efficient than other industries abroad the other less efficient industries will decline increasing unemployment
Explain the negatives of attentional interdependence
- If there isn’t mutually beneficial trade a country cannot export the surplus which they are effect t at and import what they aren’t efficient at producing
-trade may be blocked due to international relations issues
What is specialisation in economics?
Specialisation refers to the division of labour where production is split into different tasks, each performed by different workers.
Who wrote about the division of labour?
Adam Smith wrote about the division of labour in ‘The Wealth of Nations’ in the 18th century.
What was Adam Smith’s observation in the pin factory?
Smith observed that when workers performed all tasks independently, output was low.
What are the benefits of dividing production tasks?
Dividing production tasks leads to increased output, lower unit costs, and greater skill development.
What was a consequence of specialisation in the early 20th century?
Workers became bored with repetitive tasks, leading to demands for higher wages.
What should students consider regarding specialisation?
Students should consider the advantages and disadvantages of specialisation, including its impact on productivity, unit costs, output, and worker boredom.
What is the role of trade in specialisation?
As firms and individuals specialise, they need to sell their products and purchase others, creating a need for money.
What are the functions of money in the context of specialisation?
Money serves as a medium of exchange, a measure of value, a store of value, and a method of deferred payment.
