1.1.5 Specialisation and the division of labour

Define specialisation

Specialisation occurs when each worker completes a specific task in a production process

Define division of labour

Division of labour is when labour becomes specialised in a particular part of the production process

Which famous economist coined the concept of specialisation and the division of labour?

Adam Smith

What are the advantages of specialisation + the division of labour is organising production? (4)

• Increased labour productivity → workers are more efficient when focusing on on task

• Can lead to higher quality + quantity of goods + services as workers are more skilled at their jobs

• Economies of scale

• Workers only need to be trained to do one specific task, rather than mant, saving money + time

What are the disadvantages of specialisation + the division of labour is organising production? (4)

• Repetitive tasks which are boring could lead to poor qualiry of work

• Reduction of craftmanship + a much more standarised product due to mechanisation

• If for some reason production in one process is delayed, every other task has to stop until that problem is solved

• The workforce do not have wide industrial training and could therefore suffer from structural unemployment

What are the advantages of specialising in the production of goods and services to trade?

Comparative advantage (more in theme 4)

What are the disadvantages of specialising in the production of goods and services to trade? (2)

• Countries may become ​over-dependent on one particular export and if this fails their economy may collapse

• There will be ​high interdependence and this will cause problems if trade is prevented

What are the 4 functions of money?

• Medium of Exchange → can be widely accepted as payment of debt/goods; used to buy + sell goods

• Measure of Value → a measure of the relative worth of goods/debt; can compare the value of two goods, as well as labour

• Store of Value → money has to hold its value to be used for payment; inflation means cash tends to reduce value over a period of time

• Method of Deferred Payment → money is used to pay back debt, closely linked to money storing its value