Specialisation, Etc.

Question 1

List the 5 disadvantages of specialisation

Answer 1

• boredom
• high labour turnover
• risk of structural unemployment
• reliance on a narrow range of products
• limited market size

Question 2

What six roles most money fulfill?

Answer 2

• Standard for deferred payment
• store of value
• unit of account
• medium of exchange
• double coincidence on wants
• market economy

Question 3

What is standard for deferred payment?

Answer 3

Arrange to pay for a good today for the future.

Question 4

What is store of value?

Answer 4

Does not lose it’s value for future payments.

Question 5

What is unit of account?

Answer 5

Allow the value of goods and services and avoid the double coincidence of wants.

Question 6

What is double coincidence of wants?

Answer 6

Problem with barter economy consumers need to find someone who wants what they have and vice versa.

Question 7

What is medium of exchange?

Answer 7

Used to exchange goods, services, and avoid double coincidence of wants.

Question 8

What is market economy?

Answer 8

Market forces of supply and demand are allowed to guide the allocation of resources.

Question 9

What is a barter system?

Answer 9

System where you trade item for item.

Question 10

What is absolute advantage?

Answer 10

Where one business or country is able to produce more of a good or service with the same amount of resources, such that the unit cost of production is lower.

Question 11

What is comparative advantage?

Answer 11

When one business produces a good or service at a lower relative opportunity cost.

Question 12

What is the calculation for opportunity cost?

Answer 12

(Δ in opp. Cost/ Δ in extra production)

Question 13

List the 6 advantages of specialisation

Answer 13

• increased productivity
• improved quality/reduced waste
• lower prices for consumers
• increased output
• move innovation
• less time wasted

Question 14

define specialisation

Answer 14

Occurs when individual workers concentrate on a particular task within the production process.

Question 15

define the division of labour

Answer 15

each task performed by a separate person or group of persons.