Specialisation

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.

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