Specialisation & Division of labour

Question 1

What is specialisation?

Answer 1

Specialisation occurs when firms produce a narrow range of goods and services.

Question 2

What is the division of labour?

Answer 2

Division of labour occurs when production is broken down into many separate tasks.

Question 3

Advantages of specialisation and division of labour in production.

Answer 3

+ Higher productivity as workers become more skilled on their task

+ Less time wasted and lower training costs so lower costs.

Question 4

Disadvantages of specialisation and division of labour in production

Answer 4

• Workers will have limited skills.
• Workers may become demotivated due to boring and repetitive tasks leading to higher staff turnover.

Question 5

Advantages of specialisation in trade.

Answer 5

+ Countries are able to access a variety of goods/services from different countries as a result raising living standards.

+ A country producing where they have a comparative advantage leads to higher efficiency.

Question 6

Disadvantages of specialisation in trade.

Answer 6

• Reliance on a trade makes countries vulnerable to risks like changing demand and supply disruptions.
• It can cause income inequality as certain areas may benefit more from specialisation.

Question 7

What is the purpose of money?

Answer 7

Medium of exchange (Someone may not trade for your good but buy it with money)

Unit of account (Compare value of a good)

A store of goods (save money and spend after)

Deferred payment (you can pay back later)