Specialisation and trade (OCR A-Level Economics): Flashcards
📚Flashcards
Practise the cards
13 cards from this deck
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Practise the cards
13 cards from this deck
Specialisation
Specialisation
Focus on producing narrow range of goods/services
Division of labour
Division of labour
Production split into tasks; workers focus on specific tasks
Barter system
Barter system
Direct exchange of goods/services without money
Double coincidence of wants
Double coincidence of wants
Both parties want what the other party has
Key benefit of specialisation
Key benefit of specialisation
Increased proficiency through repeated practice & expertise
Division of labour: skill benefit
Division of labour: skill benefit
Workers develop greater skill & speed in specific tasks
Division of labour: time benefit
Division of labour: time benefit
Minimises time lost in transitioning between tasks
Division of labour: scale benefit
Division of labour: scale benefit
Economies of scale via larger production & specialised equipment
Consumer benefit of specialisation
Consumer benefit of specialisation
Lower prices & more diverse products
Main issue with barter systems
Main issue with barter systems
Requires double coincidence of wants, limiting trade
Barter system: measurement issue
Barter system: measurement issue
Lacks common measure, complicating price comparison
How money reduces transaction costs
How money reduces transaction costs
Eliminates need for double coincidence of wants
Money enabling specialisation
Money enabling specialisation
Allows focus on what individuals/firms are efficient at producing