Please enable JavaScript.
Coggle requires JavaScript to display documents.
Section 3 - Business Economics- Specialization - Coggle Diagram
Section 3 - Business Economics- Specialization
Production
Manufacturing something to sell
Converting inputs into outputs
Tangible - things you can touch (raw materials)
Intangible - things that can't be touched (ideas)
Outputs produced should have an exchangeable value
Productivity
Output per factor employed
Way of measuring how efficiently a company or an economy is producing its output
Output per unit employed
If a company has the same amount of input as another but produce more stuff, their productivity would be greater
You can work out the overall productivity for any one of the FOPs
Labour productivity
Output per worker/ output per hour worked
Calculate it
Take amount of output produced in a particular time
Divide this by the total number of workers or total hours worked
Allows productivity to be compared against other workers
Improvements are a result of better training/ more experience
Specialization can also improve labour productivity
Specialisation
Division of labour - production is split into different task and specific people are allocated to each task
Advantages
People can specialise in the thing they're best at
This can lead to a better quality and higher quantity of products for the same amount of effort
More efficient production, resources are used more efficiently
Training costs are reduced if workers are only trained to perform certain limited tasks
Disadvantages
Workers can end up doing repetitive tasks, which can lead to boredom
Countries can become less self-sufficient, if trade is disrupted there could be problems
Can lead to a lack of flexibility, workers and firms struggle to adapt to changes in the market
Trade
People can buy stuff they no longer make
Specialization means trade becomes vital
Swapping goods with other countries is a way a country can get what it needs - called a barter system
Most efficient way is using money, both buyers and sellers value it, countries can buy goods even if sellers don't want the things that the buying country produces
Focusing on a narrower range of activities
Adam Smith reasons
Worker won't need to switch between tasks, saves time
More and better machinery or capital can be employed, capital widening
Practice makes perfect, workers become more efficient overtime