Economics

Study Notes

Specialisation

Level:
AS, A Level
Board:
AQA, Edexcel, OCR, IB, Eduqas, WJEC

Specialisation is when we concentrate on a product or task

What is specialisation? - research question

Real-world examples of industries that make extensive use of division of labour:

  • Vehicle assembly
  • Construction industry
  • Smartphone assembly

Advantages from specialisation (division) of labour:

  • Higher productivity and efficiency – e.g. rising output per person hour
  • Lower unit costs leading to higher profits
  • Encourages investment in specific capital – economies of scale

Disadvantages from specialisation (division) of labour:

  • Risk of worker alienation
  • Risk of disruptions to production process
  • Risk of structural unemployment due to occupational immobility

Advantages for a country specializing in goods and services to trade

  • Allows a country to make full use of their economic resources
  • Increases the scale of production – leads to lower costs and prices
  • Surplus can be exported, an injection into the circular flow of income

Disadvantages for a country specializing in goods and services to trade

  • World prices for a product might fall leading to declining revenues
  • Risk of over-specializing and structural unemployment
  • Might lead to over-extraction of a country’s natural resources

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