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AS Economics > 1.1.5 +1.1.6 Specialisation and Division of labour, types of economies > Flashcards

1.1.5 +1.1.6 Specialisation and Division of labour, types of economies Flashcards

1
Q

what is specialisation?

A

when an individual, firm, region, country concentrates on the production of a limited range of goods and services

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2
Q

what are the advantages of specialisation?

A
  • increased quality and quantity
  • more efficent use of resources
  • higher output–> higher economic growth–> higher living standards
    *
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3
Q

what is the division of labour?

A

the specialisation of workers on specific tasks in the production process

production process broken into many seperate tasks

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4
Q

what are the disadvantages of specialisation?

A
  • over reliance on industies which could be risky (if they collapse)
  • ** reduced self sufficency ** due to increased interdependance
  • natural resource depletion

over specialisation

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5
Q

why is output increased with division of labour?

A

a task is divided up into sections, workers can complete their tasks accuratley in less time

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6
Q

what are some of the advatnages of divion by labour?

A
  • increased output per person (repetion of a task)
  • lower supply costs per unit(gain in labour productivity)
  • workers become more skilled through repetition (learning by doing)
  • workers are easier and chaeper to train
  • time is saved by workers focussing on a narrow range of tasks
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7
Q

what are the disadvantages of division of labour?

A
  • unrewarding- repetive work, lowring motivation and productivity
  • workers take less pride in work- quality may suffer
  • increased employee turnover –
  • unemployment risks for workers (strucutural)
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8
Q

what is the benefit of division of labour to firms and workers?

A

firms: greater quantity and quality of output
workers: higher skill levels potentially higher wages

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9
Q

what is productivity?

equation

A
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10
Q

what does increased productivity lead to?

A
  • higher output and higher quality
  • higher standard of living
  • more efficent use of resources
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11
Q

what is productivity- definition?

A

the effectivness of producitive effort, measured in terms of the rate of output per unit of input

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12
Q

what are the two methods of trading?

A
  • bartering (negotiating a price/haglling)
  • money
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13
Q

what are the 4 functions of money?

A
  • medium of exchange: comonly accepted in exchange for gods and services
  • measure of value: the price reveals a good’s value
  • store of value: value is miantained and can be kept for a long time
  • method of deffered payment: allows debt to be created (mortage)
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14
Q

what did Adam Smith have to say about divsion of labour?

A
  • it increased output
  • incraese in productiity came from workers being able to just focus on one task, but could lead to bordom

studied effects ina pin factory

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15
Q

What are the three different types of economies ?

A
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16
Q

Describe free market economies

A
  • resources are allocated by markets using the price mechanism
  • no goverment intervention (taxes, subsisdisation, regulations)
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17
Q

Describe command market economies

A
  • all resources are alloctaed soley by the state
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18
Q

Describe what a mixed economy looks like

A
  • resources are allocated using the price mechanism and the goveremnt (healthcare & transport )
  • public and private sector
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19
Q

what is the public sector?

A

part of an economy which is owned or controlled by the goverment

20
Q

what is the private sector?

A

the part of an economy which is owned or controlled by individuals or groups of people, who seek to maximise profit or raise awareness

firms

21
Q

what were smiths views on economies?

A
  • supported free markets
  • thought that the price mechanism was very efficent at allocating resources
  • goverments should leave markets alone, only act in market failure
22
Q

what is Marx’s view on economines?

A
  • against free markets as it leads to capitalism, where workers are exploited, and inequality increases
  • idea: command economy, goverment could divide resources freely
23
Q

what were Hayek’s view of economies?

A
  • having a command economy is unrealistic for one goverment to collect all information
  • whereas a free economy works well with price mechanism as a good communication network

prevents people starving due to goverment underestimation

24
Q

describe the price mechanism

A
  • prices fall to eliminate excess supply
  • prices rise to eliminate excess demand
  • comminication network
25
Q

what are the pros and cons of a free market economies?

A

pros:
* increased compettion in frims, cuttin costs, improve efficency,** lowers prices**
* price mechansim is super effcient
* more choices

cons:
* inequality
* monopolies
* market failures

26
Q

what are monopolies?

A
  • when a firm owns 25% or more of the market share
  • therfeore they can exploit their consumers (higher prices and lower quality)
  • limiting choices in free markets and mixed economies
27
Q

what is a market failure?

A
  • public goods are underprovided
  • externalities are not internalised (smoking)
  • information gaps can mislead the public (not eating enough vegables)

inefficent allocation of resources

28
Q

why is there wider choice in a free market for consumers?

A

firms have profit motive this means that in order to keep up with competition, firms develop new products and must meet consumer demand…. leading to more choice

29
Q

why are quality and innovation high in mixed and free market economies?

A
  • competition
  • profit motive
30
Q

what are the pros and cons of command economies

A

pros:
* correct market failure
* less inequality
* stops monopoly abuse

cons:
* goverment failure
* destroy incentives (workers slack off and become less productive, entreprenurs innovate less because no profit incentive)
* slow economic growth and little
* limited choice

31
Q

define barter

A

the practice of exchanging one good or service for another without using money

32
Q

define specialisation

A

when an individual, firm, region or country concentrates on the production of a limited range of goods and services

33
Q

deine division of labour

A

the specialisation of workers on specific tasks in the production process

34
Q

Define medium of exchange

A

something which i s commonly accepted in exchange for goods and services

1 of the functions of money

35
Q

define measure of value

A

the price of a good revealing it’s value

36
Q

define store of value

A

value is maintained and can be kept for a long time

37
Q

define method of deffered payment

A

allows debt to be created

38
Q

define command economy

A

an economy in which resoucres are allocated solely by the state

39
Q

define a mixed economy

A

an economy in which resoucres are alloctaed by the publi and private sector

40
Q

define a free market economy

A

an economy in which resources are alloctaed soley by the price mechansim

41
Q

define the private sector

A

the part of economy owned or controlled by individuals or groups of individuals who seek to maximise profit or raise awarness

42
Q

define efficency

A

the optimal production and distribution of scarce resources

43
Q

what is goverment failure?

A
  • unintended consequences such as black maket and smuggling
  • hard to set the size of subsidy,
44
Q

what is the role of the state in a mixed economy?

A
  • allocates resources through planning
  • redistributes incomes through welfare spending
  • regulates consumers and firms
45
Q

what is the state?

A

consists of:
* territory
* citezens
* goverments

is permenat unlike the goverment- rules over a stae at a given time

46
Q

why are free market and mixed economies less equal?

A

owners of land and capital accumulate wealth over time and pass this privillage on to their children through property, private education and social networks

AS Economics (24 decks)

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