Economics Division of Labour

Study Notes

Division of Labour

Adam Smith argued that division of labor is the source of a nation's wealth.
Division of labor, the specialization of labor in different industries or processes, increases productivity.
Smith used the example of pin making to illustrate this concept.
In the example, each worker specializes in one task, making them more efficient.
This increases the output of pins from one or a few per day to 4,800 per day.
The scope of division of labor is limited by the size of the market; larger markets allow for greater division and specialization.
Agriculture has less scope for division of labor than manufacturing.

Advantages of Division of Labour

Increased Output: Increased output arises from specialization and proficiency in each worker's task.
Increased Dexterity: Repetition of tasks increases workers' skill and efficiency.
Time Savings: Workers don't need to switch tasks, saving time and effort.
Introduction of Machinery: Division of labor encourages the development of machinery that enhances productivity and efficiency.

Disadvantages of Division of Labour

Monotony of Work: Repetition of simple tasks can lead to boredom and decreased worker satisfaction.
Immobility of Labour: Specialization may restrict workers' ability to change jobs.
Unemployment: During economic downturns, workers may be displaced as demand shifts to other sectors.

Value

Smith distinguished between two types of value:
- Value-in-use: The utility of an item (how useful it is)
- Value-in-exchange: The purchasing power of an item (how much it can be traded for)
Smith believed labor is the source of exchange value; the value of a good is determined by the amount of labor required to produce it.

Description

Explore the concepts of division of labour as outlined by Adam Smith. This quiz covers its impact on productivity, specialization, and market size. Understand how these principles apply in both manufacturing and agriculture sectors.