4.2

• Specialisation definition

  When individuals, firms or countries focus on a narrow range of tasks to increase efficiency
• what are the advtnantages of specialisation?

  • higher productivity
  • lower costs per unit
  • better quality (expertise)
  • time saved switching tasks
  • efficiency
• what are the disadvantages of specialisation?

  • boredom and lower motivation
  • overdependence on one skill/product
  • lack of flexibility
  • risk of structural unemployment
• division of labour definition

  a form of specialisation where the production process is split into stages and workers focus on one task each (e.g assembly line in a factory)
• What are the advantages of division of labour?

  • worker becoming highly skilled
  • Faster production
  • more output
  • Lower average costs
• what are the disadvantages of division of labour?

  • repetitive tasks = demotivation
  • interdependence (if one stage fails, the whole process stops)
  • harder to retrain for other jobs
• what is total production ?

  the total output of goods/services produced by a firm in a given time
• trade definition

  the buying or selling of goods and/or services
• exchange definition

  to give something in return for something else received. money is a medium of exchange
• What is the barter system?

  Trading goods or services without using money
• what is the double coincidence of wants ?

  Barter system - When two parties each hold an item the other wants, so they can exchange goods directly without money