specialisation, exchange and money

7/23/2019 Specialisation, Exchange and Money

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Specialization and

exchangeChapter-2


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Organization of production

There are two methods oforganizing production.

1.Individual production

2.Specialized production


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Methods of production

Individual production When eachperson does everthing necessar forproduction. !or example"a craftsmanma#ing pieces of furniture or potter.

Specialized production"when eachwor#er specializes in doing a particular

tas# in the process of production ofan good.


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MO$% O& S'%(I)*I+)TIO&

,ow did specialization -egin?-Over aperiod of time people realized thatthe can not produce everthing theneed so the started to specialize indoing those tas#s which the could do-est.

Exercise 3-page no-19


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Specialization and division of la-our

The increased production achieved -specialization is the result of divisionof la-our where- each wor#erspecializes in doing a particular tas#rather than -eing a /ac# of alltrades.


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(ar assem-l unit in 101


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(ar assem-l unit now afterspecialization


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)dvantages of the division of la-our

1. More goods and services can -eproduced.

2. !ull use is made of everonesa-ilities.

3. Time is saved

4. It allows the use of machiner.


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5isadvantages of the division ofla-our

1.Wor# ma -ecome -oring.

2.Wor#ers ma feel alienated

3. 'eople -ecome too dependent uponeach other

4. 'roducts are all the same.


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6arter sstem and associatedpro-lems

When one good is exchanged foranother it is #nown as 6arter.

'ro-lems associated

1. !ixing a rate of exchange

2. !inding someone to swap with.

3. Storing commodities


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Shells-as barter


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W,)T IS T,IS7


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What is Mone7

Mone is an commodit that iswillingl accepted in exchange for allother goods and services.


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The functions of mone

1. Mone is a medium of exchange.

2. Mone is a measure of value.

3. Mone is a store of value4. Mone is a means of deferredpament.


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(haracteristics of good mone

1. )ccepta-ilit

2. 5ura-ilit

3. 'orta-ilit4. 5ivisi-ilit

8. Scarcit


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What is Mone7

%xercise"9


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Than# ou:

specialisation, exchange and money

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