1.2.4 specialisation

Question 1

What is specialisation?

Answer 1

Occurs when each worker completes a specific task in a production process.

Question 2

Who famously stated the concept of specialisation? What did he show?

Answer 2

Adam Smith, who showed how, through the division of labour, worker productivity can increase. Firms can then take advantage of increased efficiency and lower average costs of production.

Question 3

What are the advantages of specialisation? [5]

Answer 3

• increased productivity
• lower production costs
• benefits from economies of scale
• enhanced efficiency
• improved competitive advantage as focusing on what is done best

Question 4

What are the disadvantages of specialisation? [4]

Answer 4

• Work becomes repetitive, which could lower the motivation of workers, potentially affecting quality and productivity. Workers could become dissatisfied
• There could be more structural unemployment, since skills might not be transferable, especially because workers have focused on one task for so long
• By producing a lot of one type of good through specialisation, variety could in fact decrease for consumers
• There could be higher worker turnover for firms, which means employees become dissatisfied with their jobs and leave regularly