Private goods Rival in consumption - The consumption of the Good by one consumer will reduce the quantity available to others Public goods Non-rival in consumption - The consumption of the Good by one consumer will not reduce the quantity available to others Excludable in consumption - Non-payers can be excluded at an affordable price Non-excludable in consumption - Too costly to exclude non-payers from consuming the Good Advantages of division of labour (Labour productivity is raised) Choosing the most suitable worker for each job - Assign jobs to workers according to their talents and makes best use of their talents - More outputs → productivity is raised Practice makes perfect - Allows workers to repeat the same task → become more skilful in the task Economy of time 1. Save time in training: Workers concentrates on only one stage of production 2. Save time in moving around jobs: Workers do not have to change tasks if they specialize in only one stage of production → saves time travelling and adapting tasks More workers have capital goods to use - Each worker only need one tool instead of a whole set of tools - As fewer capital goods are required in production → firms can afford providing sufficient tools for each worker to improve productivity Mechanisation is stimulated - Allows complicated production process to be divided into many simple tasks → enables the use of suitable machines Other advantages of division of labour Raising capital productivity - No tools will be left idle as all their tools are used all the time when workers specialize in only one job - As jobs are assigned to most suitable persons, tools are used by most suitable workers → capital goods are used efficiently Improve living standard - More productive resources and a larger volume of output is produced with DoL - More time is available for leisure and development of new products Disadvantages of division of labour To workers Work becomes boring - As workers repeat the same task day after day, they may find their work boring and will lose interest to work Greater risk of unemployment - When they specialize in a particular job, they have limited skills which is required for their own production stage only - As they have little knowledge or skills required for other production stages/ industries, it may be difficult for them to find other jobs which requires different skills To producers Over-interdependence - Production process is divided into different stages of production under DoL and all stages are interdependent - One production stage breaks down → entire production process will collapse To consumers Products become too standardized - DoL allows the use of machines for mass production - Products are standardized under mass production → Reduces consumers’ choices Limitations of division of labour Size of the market - When the market is small, it can only support a small amount of output - Producer can satisfy market demand without increasing output by DoL → limit the extent Nature of the product - Some production requires creativity, uniqueness & individual style → not suitable for teams work & DoL Trade barriers - Trade barriers such as tariff & quota limit the practice of regional DoL - As volume of trade is reduced, mass production may not be required → limit the extent Labour supply Number of workers x no. of working hours Man-hour Average labour productivity Quantity of output No. of working hours units/man-hour Factors affecting labour productivity Education and training - Education makes worker more receptive of new production methods - Training provides workers with the latest skills and techniques → raise productivity Working condition - Better and healthier working environment increases workers’ productivity Management - Good and efficient management method help workers concentrate on work & provides good co-ordination between different factors of production Incentive to work - Higher salary, more bonuses & better welfare raise workers’ working incentive - Good prospects such as opportunity for promotion, increase in salary raise incentive → thus productivity Capital and technology - If there is sufficient quantity of production factors and their quality are good, the average productivity of labour will be raised Health of workers - Better health condition enables workers to concentrate better in their work - Workers can have quicker responses & produce more efficiently Geographical mobility Definition: the willingness and ease of labour to move from one working area to another Transportation network & transportation cost - More well-developed transportation network → higher geographical mobility - Lower transportation cost → higher geographical mobility Economic, social & political conditions - People prefer places with better economic prospect & higher living standard - In regions with serious economic problem → higher geographical mobility - Social unrest and political crisis increase geographical mobility as people move to more peaceful places Immigration policies - The gov tightens the immigration restriction on workers → lower geographical mobility Market information - If market information about the availability of jobs in different areas is easily & widely accessible, workers can find jobs in different areas → higher geographical mobility Occupational mobility Definition: the willingness and ease of labour to change from one occupation to another Remuneration & working condition - Higher money & non-money return to a present job → higher cost of changing an occupation → lower occupational mobility Entrance requirements - Jobs that require specialized skills that are too specific to be applicable in other occupations → lower mobility - Labour unions & professional associations set entrance requirements → Professions that require a license → lower mobility Retraining programmes - Help workers acquire skills required by new jobs → higher mobility Market information - Recruitment exhibitions, websites, magazines & employment agencies provide market info about the availability of jobs in different industries & help workers in searching for jobs → higher mobility
