Specialisation and division of labour

Question 1

What is specialisation?

Answer 1

When each worker completes a specific task in the production process

Question 2

What is the division of labour?

Answer 2

A way of organising production where workers specialise on tasks

Question 3

Who proposed the idea of the division of labour?

Answer 3

Adam Smith, as a means of increasing worker productivity

Question 4

How is division of labour beneficial for firms?

Answer 4

They can take advantage of increased efficiency and lower average costs of production

Question 5

List the advantages of specialisation and division of labour

Answer 5

• Higher output and potentially higher quality, since production focuses on what people and businesses are best at
• There is a greater variety of goods and services produced
• There are more opportunities for economies of scale, so the size of the market increases
• There is more competition and this gives firms an incentive to lower their costs, which helps keep prices down

Question 6

List the disadvantages of specialisation and division of labour

Answer 6

• Work becomes repetitive, which could lower the motivation of workers, potentially affecting quality and productivity. Workers could become dissatisfied
• There could be more structural unemployment, since skills might not be transferbale, especially because workers have focused on one task for so long
• By producing one type of a good, variety could decrease for consumers
• There could be higher worker turnover for firms, meaning employees become dissatisfied and leave their jobs regularly