Specialisation and money Flashcards
1
Q
What is specialisation
A
The concentration of production on a narrow range of goods and services
2
Q
What are examples of specialisation at individual, firm and country levels
A
individual - specialising as a doctor
firm - specialising in assembly cars
country - specialising in agricultural products
3
Q
What is another name for specialisation at the individual level
A
The division of labour
4
Q
Explain the advantages of specialisation
A
- Increased productive and allocative efficiency leads to higher output and lower costs of production
- Improves quality
5
Q
Explain the disadvantages of specialisation
A
- Consumer preferences may change over time
- De-industrialisation could occur
6
Q
Explain the advantages of division of labour
A
- Workers are more productive
- They will receive specialist capital
7
Q
Explain the disadvantages of division of labour
A
- Workers may get demotivated
- Hysteresis more likely to occur
8
Q
Why is money crucial for specialisation
A
- Without money people would trade goods and services (barter)
- When people specialise they need to trade to obtain goods and services they don’t have
- Money acts as a medium of exchange
