A Level Economics
Revision
Theme 1(micro) – Pearson Edexcel
(Syllabus 2015 A)
,LESSON 1 OUTCOMES
THEME 1
1.1 Nature of Economics – What’s New
1.1.5 Specialisation and the Division of Labour
1.2 How Markets Work – What’s New?
1.2.3 Elasticity of Demand
1.2.5 Elasticity of Supply
,1.1.5 SPECIALISATION AND THE DIVISION OF LABOUR
Key Points
WHAT ARE ADAM SMITH’S KEY FINDINGS? WHAT ARE THE ADVANTAGES AND DISADVANTA
“An Enquiry into the Nature and Causes of the Wealth of DIVISION OF LABOUR?
Nations” (1776)
• Workers acquire specific skills → increa
productivity
BENEFITS
Markets (and economies) • Trained to use machinery → increase in
function most efficiently
The benefits of productivity
when individuals are given
the freedom to pursue self- specialisation • Time saved due to workers not changin
interest
• Workers specialise in tasks for which th
suited
The “invisible hand of the
market” Pin factory example:
EVALUATION
• Jobs may become monotonous → de
COSTS/
One person, on his/her own labour productivity and quality of wor
could only make one pin per
“It is not from the benevolence day • Increase in absenteeism due to poor
of the butcher, the brewer and
the baker that we expect our 10 people, each with a specific • Some markets are too small to benef
dinner, but from their regard to task, could make 48,000 per specialisation e.g. a village convenienc
their own self-interest” day
, 1.1.5 SPECIALISATION AND THE DIVISION OF LABOUR
Key Points
WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF WHAT COUNTS AS MONEY AND WHAT A
SPECIALISATION AND TRADE? FUNCTIONS?
• Increased production of G & S due to allocation “NARROW” MONEY
“BROAD
of resources to production of goods that can be Notes and coins in
Notes and
BENEFITS
produced more efficiently (i.e. an increase in circulation i.e. outside
bank d
productive efficiency) the Central Bank
• Increased consumption by exporting G&S in
exchange for other G&S produced more cheaply Medium of No need fo
elsewhere Exchange coincidenc
Ability to co
Measure of value value differe
EVALUATION
• Can lead to structural unemployment e.g. serv
manufacturing in Northern England
COSTS/
Ability to s
• A break down in the supply chain can have severe Store of value enables peo
consequences wea
• Can lead to primary product dependency → price Ability to me
Method of
claims e.g. agr
volatility and deteriorating terms of trade deferred payment the com
Revision
Theme 1(micro) – Pearson Edexcel
(Syllabus 2015 A)
,LESSON 1 OUTCOMES
THEME 1
1.1 Nature of Economics – What’s New
1.1.5 Specialisation and the Division of Labour
1.2 How Markets Work – What’s New?
1.2.3 Elasticity of Demand
1.2.5 Elasticity of Supply
,1.1.5 SPECIALISATION AND THE DIVISION OF LABOUR
Key Points
WHAT ARE ADAM SMITH’S KEY FINDINGS? WHAT ARE THE ADVANTAGES AND DISADVANTA
“An Enquiry into the Nature and Causes of the Wealth of DIVISION OF LABOUR?
Nations” (1776)
• Workers acquire specific skills → increa
productivity
BENEFITS
Markets (and economies) • Trained to use machinery → increase in
function most efficiently
The benefits of productivity
when individuals are given
the freedom to pursue self- specialisation • Time saved due to workers not changin
interest
• Workers specialise in tasks for which th
suited
The “invisible hand of the
market” Pin factory example:
EVALUATION
• Jobs may become monotonous → de
COSTS/
One person, on his/her own labour productivity and quality of wor
could only make one pin per
“It is not from the benevolence day • Increase in absenteeism due to poor
of the butcher, the brewer and
the baker that we expect our 10 people, each with a specific • Some markets are too small to benef
dinner, but from their regard to task, could make 48,000 per specialisation e.g. a village convenienc
their own self-interest” day
, 1.1.5 SPECIALISATION AND THE DIVISION OF LABOUR
Key Points
WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF WHAT COUNTS AS MONEY AND WHAT A
SPECIALISATION AND TRADE? FUNCTIONS?
• Increased production of G & S due to allocation “NARROW” MONEY
“BROAD
of resources to production of goods that can be Notes and coins in
Notes and
BENEFITS
produced more efficiently (i.e. an increase in circulation i.e. outside
bank d
productive efficiency) the Central Bank
• Increased consumption by exporting G&S in
exchange for other G&S produced more cheaply Medium of No need fo
elsewhere Exchange coincidenc
Ability to co
Measure of value value differe
EVALUATION
• Can lead to structural unemployment e.g. serv
manufacturing in Northern England
COSTS/
Ability to s
• A break down in the supply chain can have severe Store of value enables peo
consequences wea
• Can lead to primary product dependency → price Ability to me
Method of
claims e.g. agr
volatility and deteriorating terms of trade deferred payment the com
