4.1.2 Specialisation and trade

• What does specialisation refer to in economics?

  Concentration of production
• Specialisation allows firms, countries, or individuals to achieve greater efficiency
• Specialisation can lead to economies of scale and higher quality goods or services.
• Order the benefits of specialisation from highest to lowest priority for economic growth.

  1️⃣ Higher Living Standards

  2️⃣ Increased Efficiency

  3️⃣ Economies of Scale

  4️⃣ Higher Quality

  5️⃣ Optimal Resource Utilisation
• Specialisation increases efficiency by reducing costs and streamlining processes
• Economies of scale occur when fixed costs are spread over a larger volume of production.
• What does specialisation foster in terms of product development and production techniques?

  Innovation
• Specialisation leads to optimal resource utilisation
• What is one limitation of specialisation related to worker motivation?

  Monotony
• Over-reliance on other regions due to interdependence can create vulnerabilities to disruptions.
• Match the type of trade with its example:

  Domestic Trade ↔️ Buying groceries at a local supermarket

  International Trade ↔️ Importing cars from Germany

  Re-export ↔️ Importing crude oil for refining and re-exporting petroleum products
• International trade enhances efficiency by enabling countries to focus on producing goods where they have a comparative advantage.
• Job displacement is one disadvantage of international trade.
• What is one of the key advantages of international trade in terms of market access?

  Broadens market access
• International trade enhances efficiency through specialisation
• Specialisation in international trade leads to lower costs and higher quality products.
• What is one major disadvantage of international trade related to employment?

  Job displacement
• International trade can increase income inequality
• Specialisation allows for greater efficiency and economies of scale.
• Which country is an example of specialisation in oil production?

  Saudi Arabia
• Economies of scale occur when fixed costs are spread over a larger production volume
• Repetitive tasks in specialisation can lead to monotony and reduced job satisfaction.
• What is one limitation of specialisation related to consumer preferences?

  Demand changes
• While specialization offers numerous benefits, it also has limitations
• Monotony in specialization can lead to boredom and reduced job satisfaction.
• Examples of interdependence in specialization.

  1️⃣ Reliance on other regions

  2️⃣ Vulnerability to shortages
• Over-extraction of natural resources in specialization leads to environmental issues
• Diversification and robust risk management strategies are essential to address the limitations of specialization.
• Trade is the exchange of goods and services
• Match the type of trade with its example:

  Domestic Trade ↔️ Buying groceries at a local supermarket

  International Trade ↔️ Importing cars from Germany

  Re-export ↔️ China importing crude oil for refining
• Broader market access in international trade allows companies to reach more customers
• Enhanced efficiency in international trade results from countries specializing in their comparative advantage.
• Job displacement in international trade occurs when industries lack comparative advantage.
• Match the disadvantage of international trade with its example:

  Income Inequality ↔️ Profits for multinational corporations vs. stagnant wages for local workers

  Environmental Degradation ↔️ Deforestation to export timber

  Dependence on Other Countries ↔️ Reliance on imported oil during conflicts
• Comparative advantage enables countries to specialize and export what they produce most efficiently.
• Vietnam has a comparative advantage in producing coffee due to climate and lower labor costs.
• The opportunity cost formula is used to express comparative advantage.
• Match the type of trade barrier with its description:

  Tariffs ↔️ Taxes on imported goods

  Quotas ↔️ Limits on the quantity of imported goods

  Embargoes ↔️ Complete ban on trade with a country

  Subsidies ↔️ Financial assistance to domestic producers
• Trade barriers can distort market prices and reduce benefits from comparative advantage.
• Higher prices for consumers are an economic consequence of trade barriers.