Specialisation Flashcards
Define Unit Cost
Average cost to produce a unit of output
Staff Turnover
The amount of employees that leave a company and need replacing in a set amount of time
Specialisation
When an individual, firm, region or country concentrates on the production of a limited range of goods and services
Division of Labour
Specialisation of workers on specific tasks in the production process
Productivity Equation
Output Produced / Total Inputs Used
What is productivity
Effectiveness of productive effort
What is productive effort measured in
The terms of the rate of output per unit of input
What does increased productivity lead to
1) Higher output and higher quality
2) Higher living standards
3) More efficient use of resources
What are the advantages of the division of labour in organising production
1) Workers become more skilled through repetition of task
2) Productivity of workers rises so output increases
3) Time is saved by workers focusing on a narrow range of tasks
4) Workers are easier and cheaper to train
5) More cost effective to develop specialist tools
What is the benefit to firms from the division of labour
Greater quantity and higher quality of output
Benefit for workers from division of labour
Higher skills levels and potentially higher wages
Define Alienation
A sociological term that describes how workers feel after the division of labour as simplified and reduced tasks can lead to boredom and causes quality and morale to drop
What benefit does specialisation have to the economy
Higher Growth + Living Standards
What does economic growth lead to
Leads to higher living standards
Define regional unemployment
When an industry is an area shuts down
What are the 2 methods of trading
Barter and Money
What are the Functions of Money
Medium of Exchange - Accepted in exchange for goods and services
Measure of Value - To judge the value of a good or service
Define store of value
Value is maintained and can be kept for a long time
What happens without store of value
Value isn’t kept and leads to negative equity
Define negative equity
When a house or flat is worth less than the mortgage taken out on it
Why is the method of deferred payment system bad
It allows debt to be created
Formula for Unit Cost
Total Production Costs in Period / Total Output in Period
Define Method of Deferred Payment
A function of money that allows a system of making payments at a later date
Define Standard of Deferred Payment
A function of money that in a given market, is the accepted way to settle a debt
Define Unit of Account
A function of money that is used to measure the value or costs of products, assets, debts, incomes and spending
What is Adam Smiths contribution to the division of labour
He stated the concepted of specialisation and the division of labour and showed how it can increase labour productivity (output per worker), allowing firms to increase efficiency and lower their costs of production
How did Adam Smith come to the idea of specialisation
He visited a factory and observed that the pin making process had been split into different operations and had achieved a very high output
Disadvantages to the division of labour in organising production
1) Constant repetition of one task can lead to work becoming vert boring which will lead to not only a poor quality of work but a lack of pride for their job, causing them to leave the business
2) There is a reduction of craftmanship and a much more standardised product because of mechanisation
3) If one process is delayed, the whole production process is delayed
4) Workers who do not have wide industrial training could suffer from structural unemployment
What is the degree specialisation or the division of labour is possible dependent on
The size of the firm and the nature of the task
Advantages to specialisation in trade
Countries could specialise in producing certain goods where they have the lower opportunity cost and the relativity best at producing, this will help them boost the economy as other countries will source products from them
Disadvantages to specialisation in trade
1) Interdependence leads to a lack of self-sufficiency and will cause problems if trade is disrupted
2) Overreliance on a particular export can lead to an economic collapse if this export can not be produced or traded
3) Certain countries specialise in exports that rely on non-renewable resources, which imposes large consequences once these resources run out
