Specialisation

Question 1

Specialisation Definition

Answer 1

When a company or worker focuses their labour on a specific task in a process.

Question 2

Division of Labour Definition

Answer 2

When a company divides the labour in order to allow workers to specialise on a certain part of the production process and therefore make it quicker.

Question 3

Advantages of Specialisation

Answer 3

• Higher output and potentially higher quality
  • Greater variety of goods and services produced
  • More opportunities for economies of scale, and therefore leading to a higher market share
  • Higher competition as firms try to lower their costs, leading to lower prices for consumers

Question 4

Disadvantages of Specialisation

Answer 4

• Work becomes repetitive which leads to lower motivation of the workers
  • Structural unemployment rises, as workers can only do one certain task and therefore less jobs availiable for them to fulfill
  • Variety may decrease for consumers if firms decide to specialise on onegood
  • Higher worker turnover for fuirms as workers are less motivated and disatisfied with their jobs therefore they leave regularly

Question 5

How does Specialisation and the division of labour address the problem of scarcity

Answer 5

• Specialisation allows firms and workers to get better at the production of the good, increasing the speed the good can be produced, allowing for more of the good and therefore reducing the scarcity, allowing for more to be distributed
  • Division of labour allows workers to become more specialised in their part of the production and therefore increase the quality of the good, allowing for the good to possibly be used more and therefore there is no need to buy more than one, therefore allowing more to more people and in turn reducing the scarcity.
  • Specialisation allows for lower average costs for firms, leading to lower prices for consumers reducing inequality of the good as more people can afford to buy it

Question 6

Comparative Advantage Defintion

Answer 6

A country can produce a good at a lower oppourtunity cost to another country

Question 7

Absolute advantage Defintion

Answer 7

When a country can produce more of 1 good with the same factor inputs

Question 8

Advantages of trade

Answer 8

• Greater world output leading to gain in economic welfare
  • Lower average costs as markets expand and become more competitive leading to lower prices for consumers
  • Increase in supply of goods to choose from
  • Outward shift in PPF curve