Specialisation and division of labour

What is specialisation

when we concentrate on producing a specific product or task- specialisation happens at all levels

What are four levels at which specialisation can occur

1. Specialisation of tasks within extended families in many of the worlds poorer countries

2. Within businesses and organisations. e.g. specialist buyer employed by supermarkets

3. In a country- Bangladesh is a major producer and exporter of textiles, Norway is a leading oil and gas exporter, Ghana is one of the biggest global producers of cocoa

4. In a region of a country- for many years the west midlands has been a centre for motor car assembly, and there has been huge investment in recent years in the mini plant at oxford.

What is division of labour

It is a type of specialisation- it is the breaking down of a production process of a good or service into smaller tasks, each of which is carried out by a different person/factor input. In division of labour, no one person is able to produce an entire product

What did Adam Smith say about division of labour

He wrote about division of labour in his book “The Wealth of nations” (1776)

He considered the impact of division of labour in a pin factory in Glasgow- he claimed that by separating the production process of pins into 18 different parts, then just 10 workers would be able to produce 48000 pins in one day, a significant increase on the number that could be produced if each worker made a pin by themselves.

Smith realised that the increase in producvitity stemmed from workers being able to focus on one taskj, but said that they might become bored.

What are the possible gains from specialisation

1. Higher output

2. Variety for consumers

four Disavantages of division of labour

1. Repetitive work can lower motivation and eventually cause lower productivity

2. Workers may take less pride in work and quality may then suffer (becuase they dont actually make the whole product themselves)

3. Could cause absenteeism (staying away from work)

4. Repetitive work can cause strain injurie

Explain the concept of “characteristics and functions of money” in relation to this topic

There is a need for money in an economic system where there is specialisation. This is because at first, people produced the good or service entirely, so could trade it for another good or service- they could just swap.

However, specialisation leads to households simply producing part of a good or service so they have nothing with which to barter with, meaning money is needed

What is money

anything acceptable in the settlement of debt- for most economies, this now included notes, coins and electronic money. In the past it could be anyuything such as shark teeth, shells etc…

What are the four main functions of money

1. A medium of exchange- money is any asset widely acceptable as a medium of exchange. It facilitates transactions between buyer and seller.

2. A store of value- an asset that holds its value over time

3. A unit of account- money is a unit of measure used to value/cost products. assets, debts, incomes and spending

4. A standard of deferred payment- the accepted way in a given market to settle debt.

What are the key characteristics of money

1. Durability- it needs to last

2. Portable- easy to carry around, convenient, easy to use

3. Divisible- money can be broken down into smaller denominations to faciliatate purchases

4. Hard to counterfeit- can not easdily be faked or copied

5. Accepted- must be accepted as legal tender- must be sufficient trust in money

6. Valuable- generally holds value over time and is not destroyed by the effects of rapid/hyper inflation.