Specialisation: Labour, Region and National Level

Only available on StudyMode
  • Download(s) : 897
  • Published : October 9, 2012
Open Document
Text Preview
specialisation: labour, region,
national levels
Advantages and disadvantages for each type of
specialisation

Specialisation on labour (DOL)
Advantages:
 Massive production
 Faster and efficient use of tools
 Lower cost ( no need to retraining and reinstruct)
Disadvantages
 Boredom due to repetitive work and dull job
 Alienated to co-workers
 Danger of unemployment

Specialisation on regional level
Advantages:
 efficient use of resources
 Create jobs to residents
 Bring in income
Disadvantages:
 Risk of low demand
 Rising costs

Specialisation on national level:
Advantages:
 Achieve economies of scale
 Job creation
 Provide income to government
 Increase choice
 Improve living standard
 Surplus can be exported thus revenue earned

Specialisation on national level:
Disadvantages:
 Danger of unemployment
 Overexploitation of resources
 Negative externalities/ social cost
 Rising cost

Absolute Vs comparative
Absolute advantages
Those country able to produce more outputs than its rival
country.
For instance
Country

Item A

Item B

Japan
USA

100
95

200
250

Japan has the absolute advantage in production of item A.
USA has the absolute advantage in production of item B.

Absolute Vs comparative
Comparative advantage:
Those country that able to produce more in all production
and has lower opportunity cost than other country.
For instance:
Country

Item C

Item D

Japan
USA

100
50

400
300

Japan has absolute advantage in both production so it needs
to concentrate in one production to be specialised. Therefore it should focus on production of item C.

discuss whether it is wise to exploit than conserve resources?

Q5d ( N05) & Q6d (J08)

exploit

conserve

 ↑employment, income,

 Non renewable resources,

living standard, trade
position in the country.
 Govt receives tax
revenues and spend
them on education,
health care and
support aid on other
industry’s growth.

may run off if overuse at
rapid rate.
 Allow future generation to
continue to benefit from
the resources.
 Specialisation in other
industry so depending on
other country to provide.

In relation to private cost and
benefits
Terms:
•Private cost
•Private benefit
•External cost

•External benefit
•Social cost
•Social benefit

Case study: logging industry
Firms that engaged in logging, in the forest, are
only taking into account their private costs and
benefits. Private cost included, for example cost
of transporting the wood and the cost of
labour.
private benefits are benefits received by those
directly involved in the consumption and
production of a product. For instance, the firms
earn revenue from such activity.
They will continue to cut down the trees if their
revenues exceed their costs

In relation to external cost and benefit
Terms:
•Private cost
•Private benefit
•External cost

•External benefit
•Social cost
•Social benefit

Costs and benefits that affect other people. For
instance, costs include;a smoke produced from
logging firm may harm the health of other people
living nearby. The Firm may dump waste to a river,
may damage the fishing stock of fish farmers and
harm the environment. Benefits included; reduced
in transport cost for other firms in the area due to
the construction of roads by logging firm.
These costs and benefits will not be taken into
account by logging firm.

In relation to social costs and
benefits
 Social costs (SC) are the total costs of economic activity to

society.
when SC exceeds Private cost, there are external cost
involved.
 Social benefits are the total benefit to society.
when SB exceeds private benefit, external benefit exists.

SB>SC

Meaning society will gain from the producing more of the product than cost to society of producing more products.
Then : more resources should be devoted to its production
In contrast,...
tracking img