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Slide 1

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Topic 4
Comparative Advantage and
the role of specialisation by
Advantages for a company trading with a
country that can cheaply produce
goods/services…read more

Slide 2

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An economy / person makes the most of their
skills by focusing on what they do best.
As a skilled person produces more, output per
person rises.
This only works when people are in a position
to trade what they produce for things that they
need but don't produce from abroad…read more

Slide 3

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Individuals specialise e.g. Tool maker
Companies specialise e.g. Chevalier specialises
in rubber
Regions specialise e.g. Hertfordshire
specialised in aircraft
Countries specialise e.g. Scotland and Whisky…read more

Slide 4

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Specialisation leads to increased efficiency,
higher incomes and improved living standards.
Specialisation means
that workers know the The business has a
process as it hasn't This makes the process higher output for lower
changed so they've faster and more efficient costs, can benefit from
improved it and economies of scale
improved it
This is then re-invested
The business has a larger
into the country'
The government gains revenue and profit
residents through
more through margin from the reduced
benefit systems etc. And
corporation taxes costs as a result of the
raises the country's
economies of scale
standards of living…read more

Slide 5

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The disadvantages of specialisation
If demand for the product or sector falls and
the business is over reliant on that product or
sector it could lead to job losses and pressure
on the government
Domestic industries (especially infant
markets) will suffer from competition with
cheaper prices which could lead to job losses.…read more

Slide 6

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India can cheaply provide
call centre services to
businesses abroad e.g. BT…read more

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