Specialisation and Demand

• Specialisation??

  When people make the most of their skills by concentrating their expertise in a particular field.
• Why is specialisation in exonkics important?

  It usually refers to one country and it’s specialism in producing one specific good/service.
• What will specialisation lead to?

  Increased output per worker. as the focus is on producing one item so the people become familiar with their job.
• Division of labour??

  When workers are organised in such a way that they specialise in one part of the production process.
• Division of labour is one of the main causes of increased productivity and economic growth
• Advantages of Division of Labour??

  • Increase in productivity
  • Efficiency- being able to perfect their technique and produce high quality products.
  • Higher wages- When workers can perfect their technique and work more quickly, their value to the company increases.
• Disadvantages of Division of Labour

  • Unrewarding, repetitive work that requires little skill can lead to decreased motivation and eventually lower productivity.
  • Workers may take less pride in the work and quality suffers
  • Dissatisfied workers cause absenteeism to increase.
  • Lack of responsibility
• Advantages of Specialisation

  • Greater understanding of the requirements of production
  • Can specialise in what they are best at
  • efficient use of time as their is no switching between tasks
• Disadvantages of specialisation

  • Work can become repetitive
  • May be limited by the size of market, firms can’t afford to introduce specialisation
  • Reduces flexibility of workers
• Specialisation allows an economic agent such a a firm to:

  • Reduce unit costs; through bulk buying
  • improve quality; through better training and skills
• Specialisation allows a firm to TRADE
• Specialisation can have serious repercussions:

  • In a competitive global market Uk economic agents can quickly lose market share. This means that to UK must continually strive to improve production processes
• Benefits of specialisation BY COUNTRIES

  •Allows for trade

  •Improved national income

  •Better quality of goods
• Costs of specialisation by countries

  •Over-reliance on a limited number of industries

  •Reliance on other nations
• Demand ??


  The quality and quantity of good consumers are willing and able to buy at a given price in a given time period.
• Latent Demand ??

  exists when there is willingness to purchase a good or service but consumer lacks purchasing power to afford the product.

  This is affected by persuasive advertising which seeks to influence customer taste and preference.
• Effective demand

  quantity consumers are to willing to buy at current market price.
• What are the 6 determinants of demand?

  1. Price 2. Income 3. Preferences 4. Complimentary goods 5. Substitute 6. Advertising
• Price??

  When price rises, the quantity demanded falls and vice versa

  -People base their purchasing decisions on price if all other things are equal.
• Income??

  When income rises, so will the quantity demanded.

  Higher income=More spending power
• Taste??

  When the public desires, emotions or preferences change in a favour of a product so does quantity demanded l.
• Complimentary goods??

  Goods that are typically consumed together or used in conjunction with each other which adds value to each product. E.g. Printer and Ink
• Substitute??

  Impact of a change in price will cause consumers to switch products to an alternative. e.g. air fare to expensive consumers will switch to driving or train.
• Advertising??

  As products are highly advertised, they may experience an increase in demand.
• Basic theory of demand??

  Despite the determinants of demand it is affected mainly by price and quantity.