460152
Specialisation,
Division of Labour
and Exchange
- SPECIALISATION= the production of a limited range
of goods by an individual factor of production or firm
or country, in cooperation with others so that together
a complete range of goods is produced
- Examples of
specialisation
- Between Nations- China can produce textiles
and trade those for cars produced in the USA
- Within economies- In the UK, the 'square mile' of the City of London specialises in financial services
- Between Nations- China can produce textiles
and trade those for cars produced in the USA
- Specialisation has enabled
people to enjoy a better
STANDARD OF LIVING, one
that would be impossible to
achieve through self-sufficiency
- Examples of
specialisation
- DIVISION OF LABOUR= breaking the production
process down into a sequence of tasks, with
workers assigned to particular tasks.
- Specialisation at the level of the individual is
know as the DIVISION OF LABOUR
- Adam Smith published a book called 'The Wealth of Nations' in 1776 in
which he describes the division of labour between workers in a pin factory...
- One man draws out the wire, another straightens it, a
third cuts in, a fourth points, a fifth grinds it at the top
for receiving the head; to make the head requires two
or three distinct operations; to put it on is a peculiar
business, to whiten the pins is another; it is even a
trade by itself to put them into the paper.
- He said that 1 worker doing the whole
process alone could make 20 pins a day
whereas 10 workers specialising in the
various tasks could make 48,000 pins!
- He said that 1 worker doing the whole
process alone could make 20 pins a day
whereas 10 workers specialising in the
various tasks could make 48,000 pins!
- One man draws out the wire, another straightens it, a
third cuts in, a fourth points, a fifth grinds it at the top
for receiving the head; to make the head requires two
or three distinct operations; to put it on is a peculiar
business, to whiten the pins is another; it is even a
trade by itself to put them into the paper.
- Advantages of the division of labour
- increased aptitude
- as you repeat the task more and more times
the job is done more expertly (e.g. like typing)
- as you repeat the task more and more times
the job is done more expertly (e.g. like typing)
- time saving
- less time is used for switching between
different tasks, less time may be needed
for training as you only have to be
trained in one thing, not a whole range
- less time is used for switching between
different tasks, less time may be needed
for training as you only have to be
trained in one thing, not a whole range
- working to one's natural strengths
- allows people to do what they are relatively best at, e.g.g some people are physically strong whilst
others have strong communication skills; people can focus on activities they're best suited to
- allows people to do what they are relatively best at, e.g.g some people are physically strong whilst
others have strong communication skills; people can focus on activities they're best suited to
- use of capital equipment
- as tasks are
subdivided it becomes
worthwhile to use
machinery, as you
can produce much
larger quantities,
saving further effort
- as tasks are
subdivided it becomes
worthwhile to use
machinery, as you
can produce much
larger quantities,
saving further effort
- increased aptitude
- Specialisation at the level of the individual is
know as the DIVISION OF LABOUR
- Exchange
- Specialisation requires exchange as workers can only
special in something, financial services for instance, if
they know they will be able to exchange their services
for other goods and services such as food and housing
- In the past, barter was the main method of exchange, e.g. two chickens for a
pig, but this method would limit the development of a modern, sophisticated
economy.
- It was the development of money that enabled trade and specialisation to transform economies into what we are used to today
- It was the development of money that enabled trade and specialisation to transform economies into what we are used to today
- Specialisation requires exchange as workers can only
special in something, financial services for instance, if
they know they will be able to exchange their services
for other goods and services such as food and housing
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