4.1.4.2 Specialisation, division of labour and exchange Quiz: AQA Economics, Unit 1

The 20 questions

1. Specialisation occurs when:

   • all workers perform every task in a production process.
   • each worker or region concentrates on a limited range of tasks or products.
   • consumers purchase only one good each year.
   • firms produce goods with no inputs.

2. Division of labour refers to:

   • the sharing of profits between firms and workers.
   • the splitting of a firm into separate legal entities.
   • the separation of the production process into specialised tasks performed by different workers.
   • the division of a country into regions for taxation.

3. Which of the following is a benefit of specialisation and division of labour?

   • Workers have no need for training, so costs fall to zero.
   • Output falls because each worker becomes bored.
   • Production becomes less efficient because tasks are repeated.
   • Workers gain skill and speed in repeated tasks, which can raise output per worker.

4. Which of the following is a drawback of extreme division of labour?

   • It makes trade between firms impossible.
   • Output always falls below the level before specialisation.
   • It prevents firms from using any capital.
   • Workers may become bored and demotivated by repetitive tasks.

5. Why does specialisation make an efficient system of exchange necessary?

   • Because exchange is only needed in planned economies.
   • Because specialists never trade with others.
   • Because specialisation removes the need for any goods.
   • Because specialists produce surpluses of goods they do not themselves consume, so they must trade to obtain other goods.

6. Which of the following best describes the main problem with barter exchange?

   • Barter always requires the use of a bank.
   • Barter prevents specialisation by definition.
   • Barter requires a double coincidence of wants between the two parties.
   • Barter requires a government-issued currency.

7. Which function of money is most directly solved by its use as a medium of exchange?

   • The problem of storing value over long periods.
   • The double coincidence of wants problem in barter.
   • The problem of deferred payments on credit.
   • The problem of measuring relative prices between goods.

8. A farmer produces wheat but wants shoes. Under barter, which problem is most likely?

   • The farmer may struggle to find a shoemaker who wants wheat in exchange.
   • The farmer will be forced to produce money.
   • The shoemaker will always accept wheat immediately.
   • The farmer will be unable to buy any shoes at all.

9. Which of the following is a benefit of money as a medium of exchange rather than barter?

   • It prevents any trade from taking place.
   • It requires every producer to make the same product.
   • It increases the need for double coincidence of wants.
   • It lowers transaction costs and allows trade between many more people.

10. Why does specialisation increase total output, other things being equal?

    • Because specialisation always lowers the cost of capital.
    • Because each worker can concentrate on tasks where they have a relative advantage, improving efficiency and skill.
    • Because specialisation removes the need for trade.
    • Because specialists work fewer hours than generalists.

11. Which of the following best explains the relationship between specialisation and the growth of markets?

    • As specialisation increases, markets are no longer needed.
    • As specialisation increases, the need for exchange and markets tends to grow, since producers trade their surpluses.
    • Specialisation reduces the size of markets because workers become self-sufficient.
    • Specialisation has no link to markets.

12. A country specialises in producing software while importing food. Which statement is correct?

    • It must rely on exchange, such as trade and money, to obtain food it does not produce.
    • It has no opportunity cost in its specialisation.
    • It can obtain food without any exchange because it has specialised.
    • It will be unable to trade software at all.

13. Which of the following best evaluates the claim that specialisation always improves living standards?

    • The claim is false because specialisation reduces output.
    • The claim is true only in planned economies.
    • The claim is always true because specialisation has no downsides.
    • The claim is generally supported by productivity gains, but depends on how benefits are shared, workers' needs and disruption costs.

14. Which of the following is an example of division of labour in a car factory?

    • Different workers are assigned to fit doors, install engines and paint bodies.
    • One worker builds the whole car from start to finish.
    • The factory produces no cars and only sells advice.
    • The factory shares its profit equally with all staff.

15. Which of the following would be the most accurate statement about money as a store of value?

    • Money always keeps its purchasing power regardless of prices.
    • Money cannot be used to save for future spending.
    • Money stores value over time, though its real purchasing power can fall with inflation.
    • Money only stores value in the form of physical goods.

16. Which of the following is the best description of money as a unit of account?

    • It is a tax levied on each transaction.
    • It is a means of deferring payment for future purchases only.
    • It provides a common measure of value for comparing prices of different goods.
    • It is the stock of gold held by a central bank.

17. Which statement best evaluates the importance of money for an economy with a high degree of specialisation?

    • Money is harmful, because it always causes inflation.
    • Money is important only for governments, not for firms.
    • Money is unimportant, because specialisation removes the need for trade.
    • Money is essential, because it enables exchange across many specialised producers and reduces transaction costs.

18. Which of the following correctly links specialisation, exchange and the functions of money?

    • Specialisation removes the need for exchange, and money is only used to pay taxes.
    • Specialisation creates a need for exchange, and money makes exchange efficient by acting as a medium, unit and store of value.
    • Exchange creates specialisation, but money has no role in the process.
    • Money creates specialisation, but exchange is not required.

19. Which of the following is the best example of the benefit of specialisation for a nation's output?

    • Countries that specialise have no need for trade with other nations.
    • Countries that specialise always produce less output than if they did not.
    • Countries that specialise avoid all opportunity cost.
    • Countries that specialise in areas of comparative advantage can produce more in total than if each produced everything itself.

20. Why might a worker in a highly specialised job need a wider and more efficient exchange system to live well?

    • Because the worker must sell their labour and buy a wide variety of goods produced by others.
    • Because the worker produces all goods for themselves.
    • Because the worker's job is unrelated to any market.
    • Because the worker never needs to buy goods.

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