1.1.5 - specialisation

• Diminishing marginal utility is the extra benefit gained from consumption of a good generally declines as extra units are consumed; explains why the demand curve is downwards sloping
• Division of labour is when labour becomes specialised during the production process so do a specific task in cooperation with other workers
• Specialisastion is the production of a limited range of goods by a company/country/individual so they aren't self-sufficient and have to trade with others.
• An advantage of specialisation is that it can incresease output and potentially higher quality.

  There are also more opportunites for economies of scale
• A disadvantage of specialisation is that work becomes repetitve, which can lower the motivation of workers potentially affecting quality and productivity
• The 4 functions of money:

  • A median of exchange
  • A measure of value (unit of account)
  • A store of value
  • A method of deferred payment
• Adam Smith stated the concept of specialisation and the division of labour and showed how it can increase labour productivity (output per worker), allowing firms to increase efficiency and lower their costs of production.
• The division of labour enables labour productivity to be increased . Workers will be quicker, better and more efficient as they are concentrating on one thing and so can quickly develop their skills. It also is likely they will have natural abilities or talents in their task.
• This may also lead to a higher quality of goods and services, since workers are more skilled at their jobs.