1.1.5 Specialisation and the Division of Labour Flashcards
What is specialisation?
Specialisation is when we concentrate on producing a specific product or task.
List ways in which specialisation happens.
- Specialisation of tasks within extended families in many of the world’s poorest countries
- Within businesses and organisations, for example, specialist buyers employed by supermarkets
- In a country – Bangladesh is a major producer and exporter of textiles; Norway is a leading oil and
gas exporter. And Ghana is one of the biggest global producers of cocoa. - In a region of a country – for many years the West Midlands has been a centre for motor car assembly,
there has been huge investment in recent years in the Mini plant at Oxford
What is division of labour?
Division of labour is the breaking down of a production process of a good/service into smaller tasks, each of
which is carried out by a different person / factor input. It is a type of specialisation. In the division of labour,
no one person is able to produce an entire product.
What did Adam Smith realise about the increase in productivity from specialisation?
Smith realised that the increase in productivity stemmed from workers being able to focus on just one task,
gaining large increases in dexterity, being able to use specialist tools to get the job done, and wasting less
time moving from task to task. He did note, however, that this could cause significant boredom.
What are the possible gains from specialisation?
By concentrating on what people and businesses do best rather than relying on self-sufficiency we may
experience:
* Higher output: Total production of goods and services is raised, and quality can be improved
* Variety: Consumers have access to a greater variety of higher-quality products
* A bigger market: Specialisation and global trade increase the size of the market offering
opportunities for economies of scale to be exploited, leading to lower unit costs and prices
What are the possible disadvantages from specialisation?
- Unrewarding, repetitive work that requires little skill can lower motivation and eventually causes lower
productivity. - Workers may take less pride in work and quality suffers.
- Dissatisfied workers cause absenteeism to increase
- People move to less boring jobs creating a problem of high worker turnover and increased
hiring/training costs - Increased risk of repetitive strain injuries at work
- Some workers receive little training and may not be able to find alternative jobs when out of work –
they suffer structural unemployment / occupational immobility - Mass-produced standardized goods may lack variety
What are the main functions of money?
What is money as a medium of exchange?
money is any asset widely acceptable as a medium of exchange. It facilitates transactions between buyer & seller. Specialisation and the division of labour require a means of exchanging goods and services
What is money as a store of value?
an asset that holds its value over time.
What is money as a unit of account?
money is a unit of measure used to value/cost products, assets (e.g. houses), debts, incomes and spending.
What is money as a standard of deferred payment?
the accepted way, in a given market, to settle a debt.
What are the key characteristics of money?
- Durability i.e. it needs to last
- Portable i.e. easy to carry around, convenient, easy to use
- Divisible i.e. money can be broken down into smaller denominations to facilitate purchases
- Hard to counterfeit - i.e. it cannot easily be faked or copied by currency fraudsters
- Accepted i.e. money must be accepted as legal tender – there must be sufficient trust in money
- Valuable – i.e. it generally holds value over time and is not destroyed by the effects of rapid /
hyper-inflation
