Specialization: The concentration on
particular products or tasks
Specialization
of Countries
What countries are good at producing is
influenced by the quantity and quality of their resources.
If countries specialize in what they are
best in producing, their output should be higher and their citizens should
enjoy high living standards.
ADV: If the country produces a relatively
narrow range of products, then the countries will have to export those products
to gain revenue to spend on imports.
DISADV: Concentrating on a few products is
fine if demand for such products remain high and costs of production do not
rise. If either demand falls or costs of
production rises suddenly, then the countries won’t earn much revenue from
selling those products. Producing a wide range of products spread risks.
Specialization
of firms
ADVANTAGES
1.
Firms that specialize in a
narrow range of products can get to know their markets well and build up a
reputation.
2.
Easier to control a firm that
only makes a few products
DISADVANTAGES:
1.
Risks of demand of product
falling are high. This would lead to less profits being made
INFLUENCERS
1.
Nature of resources available
to producers
2.
Location of firm and demand in
that location
Specialization
of Workers
Also referred to division of labour
Instead of producing
the whole good, a worker carries out one task
ADVANTAGE
1.
Lower cost
per unit produced-
a.
The worker
can specialize in the task they are best at and by doing it again and again, they
become very good at it and their productivity rises. Unit costs decrease.
b.
Concentrating
on particular tasks mean that workers may be trained more quickly and they
would not need to obtain knowledge about handling the full range of equipment.
Thus time will be saved and the workers could work for longer.
DISADVANTAGE
1.
Workers
may get bored of doing the same task every day. Therefore, the workers would
make more mistakes.
2.
Having
specialized staff will also make it difficult for other workers to cover up for
those that are absent due to sickness and training
Specialization and the individual
Entrepreneurs
ADVANTAGES
1.
An
entrepreneur starting a new firm would find it easier to concentrate on the
manufacture of one or two products. He could then later on employ staff with
expertise in different areas.
Workers
ADVANTAGES
1.
Workers
who are specialized can become very skilled and if their skills are in high
demand then, they can earn high wages.
2.
Concentrating
on a particular job or task can help a worker pursue his specific interests.
Eg: a doctor interested in brain disorders would like to specialize in that
field.
3.
Specialization
in less demanding jobs can reduce pressure on workers.
DISADVANTAGES
1.
If demand
for that particular type of job falls, then the worker may not be able to get
another type of job.
2.
Concentrating
on particular task may be boring and will not make full use of the workers’
talents
Consumers
ADVANTAGES
1.
Lower
prices and better quality of products
DISADVANTAGES
1.
Consumer
may lose out in terms of variety. Eg: A builder would focus on building flats
of the same type
The
extent of specialization
Factors that influence
the extent of specialization include:
1.
Size of
the market- If the market is large, then the size of its output will be large
and so it will employ a higher no. of workers. In this case its workers can
specialize as each worker can do a specific task. All the tasks would be
completed because the number of workers is high.
2.
Transport
Links- If there are many good transport links (good = product) , then the firm
can sell its products to different parts of the country. This increases the
size of the market as the number of consumers have increased. So the size of
firms would increase causing them to employ more workers.
3.
Money also
facilitates specialization. When workers and firms special specialize, trade
becomes imperative. Some products produced have to be exchanged for other
products.
Functions of money
1.
Acts as a
medium of exchange and allows people to buy and sell products.
2.
Acts as a
store of value
a.
Money can
be stored
3.
Unit of
account
a.
Money is used to place values on items. This
function enables buyers and sellers to agree on what items are worth, relative
to each other.
4.
Standard
of deferred payments
a.
Money
allows people to borrow and lend
Types of money
Coins, notes and bank
accounts
Money can be
transferred from one bank account to another by direct debits and cheques
Bank accounts are the
most important form of money. However, neither bank accounts nor cheques are
legal tender.
1.
An item
does not need to have an intrinsic value to be act as money. Eg: Silver.
2.
Recognizable
(People can easily see that the item is money)
3.
Should be
limited in supply.
4.
Should be
durable
5.
Divisible
( should be able to divide into different units)
6.
Homogenous
( every note or coin is the same value)
