Unit 1 - 1

Question 1

Advantages of Specialisation

Answer 1

1. Concentrate on what they’re best at = increased efficiency
2. Increased quantity of goods and services
3. Increased quality of goods and services
4. Internationally = increased SoL

Question 2

Disadvantages of Specialisation

Answer 2

1. Changing consumer tastes
2. Output may be disrupted (bananas in the weather)
3. If good is essential - can put some countries in powerful position in terms of trade
4. The materials may run out (coal in the UK)

Question 3

What is Productivity?

Answer 3

The amount of output that can be produced from a given input of resources

Question 4

How is productivity calculated?

Answer 4

Output/Input

Question 5

What is Specialisation?

Answer 5

The production of limited goods by an individual, firm or country in cooperation with another individual, firm or country to produce a whole range of goods.

Question 6

How would you increase productivity?

Answer 6

1. Substitution (replacement of labour with capital)
2. Division of Labour
3. Motivation techniques to workers
4. Improved Training

Question 7

What is Division of Labour?

Answer 7

Specialisation in the workplace by individuals

Question 8

Advantages of Division of Labour

Answer 8

1. Workers only need skills in few tasks = increased production
2. Cost-effective as specialist tools can be provided to specific tasks
3. More time as workers do not need to move around

Question 9

Disadvantages of Division of Labour

Answer 9

1. Work can become tedious as very repetitive = decreased motivation = decreased production
2. More absentees likely
3. Non-transferable skills, hard to find another job

Question 10

Perfect Market Characteristics

Answer 10

1. Does not exist in the real world
2. Large number of firms - no firm is large enough to influence price - all firms are pricetakers (go by market price)
3. Large number of buyers, no buyer is large enough to influence price
4. Freedom of entry and exit to industry
5. Perfect knowledge - all consumers and producers know they costs being charged by every producer so if one producer raises their price no one will buy
6. Homogenous product - no differentiation, no branding, output of each firm identical

Question 11

What is an Imperfect Market?

Answer 11

Any market that does not have any of the characteristics of a perfect market

Question 12

What are the main types of Imperfect Market?

Answer 12

MONOPOLY
OLIGOPOLY
MONOPOLISTIC COMPETITION
MONPSONY

Question 13

What is Monopsony?

Answer 13

1. There is only one buyer
2. The buyer can dictate the
   - price
   - product design
   - delivery
3. Eg. Supermarkets and Fast Food