NATURE OF ECONOMICS (specialisation and division of labour)

Question 1

What is meant by specialisation?

Answer 1

When an economy focuses on making one good and is efficient at making it, then trades the surplus.

Question 2

What are 3 benefits of specialisation?

Answer 2

• The quality of the good is higher because the workers become more skilled in making it.
• The output is higher because workers do not have to swap and change between tasks.
• Firms can operate on larger scales of production. (economies of scale)

Question 3

What is meant by productivity and how can you measure it?

Answer 3

Productivity is the total output by each worker in a given time frame.

You can measure it by comparing labour time to goods produced.

Question 4

Why is a system of exchange an essential part of specialisation?

Answer 4

Because they focus on producing one good and then trade the surplus.
This surplus must be traded through a method of exchange.

Question 5

What might increase labour productivity in a market?

Answer 5

• If there are more workers in a market
• If the workers receive more training they can become more skilled.
• increase in incentives (eg higher wages)

Question 6

How does division of labour increase productivity?

Answer 6

• Workers can become highly skilled in the stage of production they specialise in.
• No time is spent swapping between tasks.

Question 7

How does division of labour increase productivity?

Answer 7

• Workers can become highly skilled in the stage of production so they become highly efficient at it.
• No time is spent swapping between tasks.

Question 8

Name 3 disadvantages of specialisation?

Answer 8

• workers could become bored of performing the same tasks which could lead them to becoming less productive.
• The workers could become inflexible and have a narrow skillset.
• There is a higher dependence on each worker. if one falls ill it could be difficult to cover as they are only specialised.

Question 9

What are the 4 functions of money?

Answer 9

A METHOD OF EXCHANGE- it can allow people to specialise and exchange the surplus.

A STORE OF VALUE- people can save money and use it in the future.

A MEASURE OF VALUE- People can asses the value of goods and services.

A MEANS OF DEFERRED PAYMENT- allows people to buy goods and pay for them on credit.