1.1.5 - Specialisation and the division of labour

Question 1

Specialisation -

Answer 1

The concentration of production on a narrow range of goods and services

Question 2

Division of labour -

Answer 2

(after specialisation) Breaking down the production process into separate tasks upon specialisation

Question 3

Adam Smith described division of labour -

Answer 3

Adam Smith described division of labour of pin workers in his book; 1 worker could make 20 pins a day but 10 could make and est. 48,000 pins by working together and specialising in a variety of tasks

Question 4

The advantages of specialisation and
the division of labour in organising production

Answer 4

1. workers are highly productive - increase wages, time saved, reduce costs, reduced prices for consumers, output max = high profitability
2. specialist capital for workers - special machines help workers who are already very good at task = even further productivity maximised
3. lower prices, high quality/choice

Question 5

The disadvantages of specialisation and
the division of labour in organising production

Answer 5

1. demotivation of workers - productivity falls, CoP rises
2. high worker turnover - if many are being demotivated and quitting
3. workers have risk of long term unemployment - due to massive overspecialisation, tech may take their jobs
4. highly standardised g and services - factory made, lose unique touch consumer like

Question 6

The advantages of specialising in the production of goods and services to trade

Answer 6

1. higher output - output maximisation - resources focused into efficient production, increased trade due to mutually beneficial trade for specialisation to work (ill X this if u can M me this) = increase growth (macro benefits = increase in choice, living standards, job opp)
2. wider range of goods and services - eg dyson - specialise air products; hair dryer, vacuum, hand dryer
3. greater AE - reduce scarcity - resources will go to companies/regions/countries who are most efficient at producing and resources taken away from inefficient production towards efficient production to max output = most efficient use of scare resources and satisfies more demand - basic econ problem
4. higher productivity through better use of workers - used to max PPP = lower CoP and passed onto consumers
5. quality improvements

Question 7

The disadvantages of specialising in the
production of goods and services to trade

Answer 7

1. finite resources = overspecialised and require certain input to production = if it runs out or cant get access = cannot produce g or s anymore
2. changes in fashion/tastes - can be an issue if business hasn’t diversified
3. deindustrialisation - if foreign country/firm become more efficient then another industry = the less efficient one declines = high rates of unemployment
4. national interdependence - eg political issue/trade blocs means trade is restricted and mutual benefit is not achieved so the specialisation doesn’t work

Question 8

The functions of money

Answer 8

Money can be anything as long at it satisfies these 4 functions:

Medium of exchange:
- need money that both parties will accept - allows economy to run

Store of value:
- cant deteriorate over time
- inflation does erode this idea (but you can still store money overtime)

Measure of value:
- unit of account function - can understand something £10 has less value than something £20

Method of deferred payment:
- people can borrow money and pay later overtime

Question 9

Some quality Y2 evaluations

Answer 9

• specialisation improves MPL (marginal product of labour) which means MRPL (marginal revenue product of labour) increases - EVAL: However labour is derived demand so if there is no D for a good then it wont increase employment
• Risk bearing economies of scale - specialisation means that countries are not safe from exogenous shocks = sugg its bad