Specialisation is when an individual, organisation or country specialise in the production of a good or service. Countries specialise in a product, commodity or service due to finate resources, efficiency and trade.
Benefits of Specialisation
- Can create a more efficient production process
- Less wastage of finate resources
- Encourages trade between different economies
Drawbacks of Specialisation
- Tasks can become boring which can lead to mistakes
- Overdependant on one good, which can lead to less commodity if prices fall, demand is less or resources run out
Division of Labour - This is specialisation on an individual level where the production process is broken down into small parts.
Objectives of Economic Agents and Maximisation
Households (us) - demand goods and services
Firms - exist to produce output of goods and services
Government - fulfils several roles in society. It undertakes expenditure and influences the economy through taxation and regulation of markets
Maximisation - is the process which underpins much of economic analysis. Research as suggested that economic agents do not always act rationally by using maximising behaviour