T1: LS5 - Specialisation, DOL and Money

Question 1

What is the Division of Labour?

Answer 1

Specialisation: occurs when an individual, firm, region or other economic agent concentrates its production on producing a narrow/limited range of G&S.

Question 2

What are the benefits and disadvantages of Specialization?

Answer 2

Benefits: Q2SEAT
Q - quality improvements
Q - quantity improvements
S - Standard of living increases
E - efficiency
A - allocative efficiency
T - trade

Disadvantage: OFF
O - Over-reliance in industries
F - finite resources for certain industries
F - fashion changes make it obsolete

Question 3

What is the definition of the Division of Labour?

Answer 3

Division of Labour: refers to the specialisation of workers in focusing on completing a narrow range of tasks requiring a narrow range of skills within the production process.

Question 4

What are the advantages and disadvantages of the Division of labour

Answer 4

Benefits: Q2TCP
Q - quantity produced
Q - quality produced
T - training costs
C - costs
P - productivity

Disadvantages: BUS
B - boredom
U - unemployment
S standardised goods with no variation
- lower worker retention

Question 5

What are the two methods of trading?

Answer 5

Bartering and Money

Question 6

What is bartering?

Answer 6

Bartering: the exchange of G&S between two or more parties without the use of money or a standardised value.
- based on value judgements

Question 7

Money definition

Answer 7

Money: a commodity or constant medium of exchange with four different functions.

Question 8

What are the four functions of money?

Answer 8

Medium of exchange: used as a method of exchange for G&S
Measure of Value: prices are used to indicate the value of G&S
Store of Value: value is maintained over time (however inflation changes what can be bought for it)
Method of deferred payment: the idea of debt being created with a “buy now pay later” idea.