specialisation and trade Flashcards
specialisation in individuals
focus or concentration of an individual’s efforts, skills, and knowledge on a specific area or task within the workforce or society. It involves becoming very good in a particular field, industry, profession, or skill set.
what is specialisation
specialization refers to the concentration of productive efforts of individuals, firms, regions, or nations on a limited number of activities.
plays a crucial role in promoting economic efficiency and increasing overall output.
specialisation in firms
refers to the practice of focusing on a narrow set of activities, products, or services within a particular industry or market. This strategic choice allows firms to become very good and efficient in their specialised area,
specialisation in regions
refers to the concentration of economic activities, industries, or sectors within a particular geographical area. This concentration can occur due to various factors such as natural resources, historical factors, or deliberate policy decisions. Specialisation in regions can have significant implications for economic development, competitiveness, and regional growth.
specialisation in the nation
Specialization in the context of a nation refers to the concentration of economic activities, industries, or sectors within the country’s borders. This specialization can occur due to various factors, including natural endowments (specialising in industries or sectors that capitalize on their natural resources), comparative advantages (economy’s ability to produce a particular good or service at a lower opportunity cost than its trading partners)
what is the barter system
exchange of goods and services between 2 or parties with out the use of money e.g loaf of bread for 2 potatoes
2 advantages of barter trading
encourages individuals to develop and utilise their skills to meet their needs or desires without relying solely on monetary transactions.
advantageous in situations where there is a lack of trust in traditional financial systems
2 disadvantages of barter trading
Without a common medium of exchange like money, determining the value of goods and services in a barter transaction can be subjective
the requirement for a double coincidence of wants, where exchanges can only occur if both parties have goods or services the other desires.
what is the division of labour
the separation of a work process into a number of tasks, with each task performed by a separate person or group
what is a medium of exchange
Money acts as a medium of exchange. This allows goods and services to be traded without the need for a barter system.
how is money used as a medium of exchange
to express the value or worth of an item or service
how can specialisation help address the problem of scarcity (3)
efficiency- produce more output with the same amount of resources or produce the same output with fewer resources, thereby shifting the impact of scarcity.
resource allocation- allows resources to be allocated more effectively based on when individuals or businesses specialise in areas where they can produce a good or service at a lower opportunity cost resources are utilised more efficiently, helping to address scarcity by maximising output.
trade- trade with others to obtain a broader range of goods and services than they could produce themselves.
benefits of using division of labour to help scarcity (2)
increased productivity- allows firms or individuals to focus on tasks that they’re best at leading to a higher output rate and a chance to improve their skill in that specific area
increased efficiency- it leads to increased efficiency as individuals become more skilled and proficient in their specialised roles so they can produce more units in a shorter amount of time
what is a comparative advantage
countries can benefit from trading with each other by focusing on making the things they are best at making, while buying the things they are not as good at making from other countries
