4.2 specialisation

Question 1

what is specialisation?

Answer 1

a worker performing one task

Question 2

what is the division of labour?

Answer 2

a type of specialisation where production is split into different tasks and specific workers are allocated to each task

Question 3

What did Smith establish?

Answer 3

the benefits of specialisation

Question 4

what are Smith’s benefits of specialisation?

Answer 4

1) a worker doesn’t waste time to switch between tasks
2)workers improve their skills and so become more efficient
3)more capital can be employed to perform simple tasks

Question 5

can you think of any disadvantages of specialisation?

Answer 5

1)can be repetitive and boring
2)can lead to structural unemployment

Question 6

why does specialisation require an efficient means of exchange?

Answer 6

because people cannot enjoy a reasonable standard of living by only consuming what they produce

Question 7

why is the barter system an inefficient means of exchange?

Answer 7

requires a double coincidence of wants

Question 8

what is the most efficient means of exchanging goods?

Answer 8

money as a medium of exchange

Question 9

what are the four functions of money?

Answer 9

1)store of value
2)medium of exchange
3)measure of value
4)method of deferred payment