| What is the Division of Labour?
-What did Adam Smith say about it - use the Example with Pins | -This is where Production splits into Multiple Tasks, and Different People are selected to Each Task.
-Adam Smith said Productivity would increase Massively. 1 Untrained worker wouldn't make 20 Pins a Day, but 10, with Division of Labour and Specialisation, would make 48,000 |
| What are the Advantages of Specialisation? | -People specialising into what they do Best can lead to Better Quality and more Quantity for the Same Amount of Effort - Labour Productivity Improves
-This is one way Firms can have Economies of Scale - a Production Line is a Form of Specialisation
-Efficient Production helps tackle the Problem of Scarcity. If Resources used better, then More Output can be made per Input of Resource
-Training Costs reduced if Workers trained to make Limiting Tasks |
| What are the Disadvantages of Specialisation? | -Workers doing Repetitive Tasks leads to Boredom
-Nations become less Self-Sufficient and more Reliant. If Trade suddenly becomes negatively effected, for say Oil, then Nations who Import a lot of Oil will struggle a lot
-Inflexibility can be setup - for example when the Mines shutdown, it led to the Workforce having only Non-Transferrable Skills. In other words, Structural Employment across North England and Wales. |
| Why des Specialisation make Trading so Important? | -People, Firms and Nations can get Things they aren't making Themselves. This means its Vital to have a way to Exchange Goods and Services, for example by Swapping Goods. (Guns for Butter) |
| Why do we use Money? Why not a Barter System? | -A Barter System is when Goods are swapped for other Goods eg Guns for Butter. This is Inefficient as it takes Lots of Times for Traders to successful Barter
-Money acts as a Medium of Exchange - both Buyers and Sellers Value, which allows Nations to buy Goods even if Sellers don't want whatever the Nation produces. Exchange Rates are also Important here. |
| What other functions does Money serve as well? | -Measure of Value: Value given to example Barrel of Oil measured in US Dollars
-Store of Value: Person who gets a set wage may wait to purchase something if they believe its value will be maintained.
-Standard of Deferred Payment: Money can be paid at later date for something consumed / used now. For example University Fee. |
