1.1.5 Specialisation & The Division of Labour

• Specialisation means that workers only do the tasks they are best or most efficient at.
• Specialisation and the division of labour is a concept stated by Economist Adam Smith in his book 'The Wealth of Nations'.
• Adam Smith showed how through the division of labour, worker productivity can increase, and firms can take advantage of increased efficiency and lower average unit costs.
• Advantages of Specialisation and Division of Labour

  1. Higher output and quality.
  2. Greater variety of goods produced.
  3. More opportunities for economies of scale due to an increase in market size.
  4. More competition - incentive to lower costs.
• Disadvantages of Specialisation and Division of Labour

  1. Repetitive work - decreases motivation and satisfaction.
  2. Increase in structural unemployment - skills may not be transferable.
  3. Decrease in variety of products.
  4. Low staff retention
• Four Functions of Money

  1. Medium of exchange
  2. Measure of value
  3. Store of value
  4. Method of deferred