Specialisation

Question 1

Define Unit Cost

Answer 1

Average cost to produce a unit of output

Question 2

Staff Turnover

Answer 2

The amount of employees that leave a company and need replacing in a set amount of time

Question 3

Specialisation

Answer 3

When an individual, firm, region or country concentrates on the production of a limited range of goods and services

Question 4

Division of Labour

Answer 4

Specialisation of workers on specific tasks in the production process

Question 5

Productivity Equation

Answer 5

Output Produced / Total Inputs Used

Question 6

What is productivity

Answer 6

Effectiveness of productive effort

Question 7

What is productive effort measured in

Answer 7

The terms of the rate of output per unit of input

Question 8

What does increased productivity lead to

Answer 8

1) Higher output and higher quality
2) Higher living standards
3) More efficient use of resources

Question 9

What are the advantages of the division of labour in organising production

Answer 9

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

Question 10

What is the benefit to firms from the division of labour

Answer 10

Greater quantity and higher quality of output

Question 11

Benefit for workers from division of labour

Answer 11

Higher skills levels and potentially higher wages

Question 12

Define Alienation

Answer 12

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

Question 13

What benefit does specialisation have to the economy

Answer 13

Higher Growth + Living Standards

Question 14

What does economic growth lead to

Answer 14

Leads to higher living standards

Question 15

Define regional unemployment

Answer 15

When an industry is an area shuts down

Question 16

What are the 2 methods of trading

Answer 16

Barter and Money

Question 17

What are the Functions of Money

Answer 17

Medium of Exchange - Accepted in exchange for goods and services

Measure of Value - To judge the value of a good or service

Question 18

Define store of value

Answer 18

Value is maintained and can be kept for a long time

Question 19

What happens without store of value

Answer 19

Value isn’t kept and leads to negative equity

Question 20

Define negative equity

Answer 20

When a house or flat is worth less than the mortgage taken out on it

Question 21

Why is the method of deferred payment system bad

Answer 21

It allows debt to be created

Question 22

Formula for Unit Cost

Answer 22

Total Production Costs in Period / Total Output in Period

Question 23

Define Method of Deferred Payment

Answer 23

A function of money that allows a system of making payments at a later date

Question 24

Define Standard of Deferred Payment

Answer 24

A function of money that in a given market, is the accepted way to settle a debt

Question 25

Define Unit of Account

Answer 25

A function of money that is used to measure the value or costs of products, assets, debts, incomes and spending

Question 26

What is Adam Smiths contribution to the division of labour

Answer 26

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

Question 27

How did Adam Smith come to the idea of specialisation

Answer 27

He visited a factory and observed that the pin making process had been split into different operations and had achieved a very high output

Question 28

Disadvantages to the division of labour in organising production

Answer 28

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

Question 29

What is the degree specialisation or the division of labour is possible dependent on

Answer 29

The size of the firm and the nature of the task

Question 30

Advantages to specialisation in trade

Answer 30

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

Question 31

Disadvantages to specialisation in trade

Answer 31

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