4 Specialisation and trade

Question 1

Specialization

Answer 1

• Focusing on one activity or part to be above to produce more efficiently

Question 2

Division of labour

Answer 2

• Splitting up a task into smaller activities to be able to produce more efficiently
• by providing easier and simpler steps workers become expert and therefore process becomes quicker and more efficient

Question 3

Advantages of division of labour

Answer 3

• quicker production process
• able to produce more goods and services
• lower average cost of production

Question 4

disadvantages of division of labour

Answer 4

• can be demotivating for the workers to focus on one small task
• A single worker absent or piece of capital equipment malfunctioning can stop whole production process
• May be a barrier to entering a market for smaller firms that cannot afford the investment

Question 5

effectiveness of division of labour and specialization

Answer 5

• the nature of the good and service - will help car manufacturing but not the process of cutting hair
• The importance of price to consumers - consumers are often willing o pay more or goods and service that have been made by skilled labour rather than mass production
• changes in technology - firms cannot affrc yo but specialist capital or to train workers because process changes so often

Question 6

Barter system

Answer 6

• system of exchanging one product for another without the use of money as a medium exchange

Question 7

Money as a medium of exchange

Answer 7

• providing something that both seller and buyer can agree has value
• if both value of currency is agreed a price can be negotiated and trade becomes easier