LS5 - Specialisation and the Division of Labour

Question 1

What is specialisation?

Answer 1

When production is concentrated on a limited number of goods and services

Question 2

What is the division of labour?

Answer 2

The specialisation of specific workers on specific tasks within the production process

Question 3

What are the advantages of the division of labour for workers?

Answer 3

Workers can become more skilled at their jobs due to repetition
Time is saved for the workers as they have less tasks to do

Question 4

What does increased productivity lead to?

Answer 4

Higher output and higher quality
Higher living standards
More efficient use of resources

Question 5

What are the advantages for division of labour for firms?

Answer 5

Workers are easier and cheaper to train

Workers become more productive so overall output and quality increases

Question 6

What are the disadvantages of division of labour?

Answer 6

Repetition of tasks can lead to boredom and drop in morale

Simplified job tasks can lead to a drop in pride for workers

Question 7

What are the advantages of specialisation?

Answer 7

More efficient use of scarce resources, more trade with other countries, more growth and higher living standards, higher output, higher quantity and quality, more economic growth

Question 8

What are the disadvantages of specialisation?

Answer 8

Overreliance on few industries is risky

Increased interdependence can lead to a reduce in self - sufficiency

Question 9

What are the functions of money?

Answer 9

Medium of exchange, measure of value, store of value, method of deferred payment

Question 10

What is Medium of Exchange?

Answer 10

Bartering by trading goods and services for other goods and services

Question 11

What is Measure of Value?

Answer 11

Assigning a value / price of a product and buying / selling it using a form of currency

Question 12

What is Store of Value?

Answer 12

A good which keeps its value which you can then resell after buying the good few years earlier

Question 13

What is Method of Deferred Payment?

Answer 13

Paying something in staggered amounts from your income as you cannot afford all of the money at one time

Question 14

What is a unit cost?

Answer 14

The average cost to produce a unit of output

Question 15

What is the equation to calculate unit costs?

Answer 15

Total Production Costs in Period / Total Output in Period

Question 16

What can lower unit costs lead to?

Answer 16

More profit
Higher wages
Lower prices
More investment
More innovation

Question 17

What is causing specialisation to increase between nations?

Answer 17

Globalisation

Question 18

What was Adam Smith’ s ideology?

Answer 18

That if workers were specialised and they all did different tasks, then productivity would increase much more
(1 worker - 20 pins, 10 workers - 48000 pins)

Question 19

What is productivity?

Answer 19

Output per unit of input employed

Question 20

What is labour productivity?

Answer 20

The amount of output per worker

Question 21

What is capital productivity?

Answer 21

Output per unit of capital employed

Question 22

What counters the store of value?

Answer 22

Inflation or hyperinflation

Question 23

What is cash?

Answer 23

Notes and coins, which are tokens with no intrinsic value that have been accepted by the government as law

Question 24

Explain money that is in current accounts?

Answer 24

Money in current accounts can be withdrawn on demand if it is on credit. Cheques and debit cards are used to purchase goods and services.

Question 25

What are the disadvantages of money in current accounts?

Answer 25

People can reject payment of debit cards and cheque books, and little or no interest can lead to a loss of money due to inflation

Question 26

Is a cheque book medium of exchange or measure of value?

Answer 26

Medium of exchange

Question 27

What are near monies?

Answer 27

Assets which can be used as measure of value or store of value but not as medium of exchange, but they are easily convertible to medium of exchange.

Question 28

What does liquidity mean?

Answer 28

How easily something can be converted into money without a loss of value

Question 29

What are non-money financial assets?

Answer 29

Financial assets which can be converted into money, but there would be penalties for doing so and it would be time consuming

Question 30

What are money substitutes?

Answer 30

Objects which can be used instead of money, such as credit cards or charge cards

Question 31

What does illiquid mean?

Answer 31

An asset that is difficult to convert into cash

Question 32

What is hyperinflation?

Answer 32

A very fast increase in prices which would damage a country’s economy