Specialisation and division of labour Flashcards
What is the division of labour?
Occurs when the work is split up into small specialised tasks.
What was Adam Smith stance on the division of labour?
In The Wealth of Nations Adam Smith set out the view that economic growth could be achieved by increasing the division of labour.
He used the example of pin making to demonstrate the division of labour
What are the advantages of division of labour?
Each worker specialised in tasks for which that worker is best suited
Reduced training costs for firms
Less time is wasted
Increased productivity and reduced costs of production
What are the disadvantages of labour?
Monotony and boredom of workers
Loss of skills
A strike by a group of workers could stun production
Lack of variety
What are the limits to the division of labour?
Size of the market
Type of product
Transport costs
What is money?
Refers to anything that is used as a means of exchange for goods and services
What are the key functions of money?
Medium of exchange
A store of value
Measure of value
Means of deferred payments
