Specialization and

exchange
Chapter-2

Organization of production
There are two methods of
organizing production.
1.Individual production
2.Specialized production

Methods of production
Individual production When each
person does everything necessary for
production. For example-a craftsman
making pieces of furniture or pottery.
Specialized production-when each
worker specializes in doing a particular
task in the process of production of
any good.

MORE ON SPECIALIZATION
How did specialization begin?-Over a
period of time people realized that
they can not produce everything they
need so they started to specialize in
doing those tasks which they could do
best.

Exercise 3-page no-19

Specialization and division of labour

The increased production achieved by
specialization is the result of division
of labour, whereby each worker
specializes in doing a particular task
rather than being a Jack of all
trades.

Car assembly unit in 1910

Car assembly unit now after

specialization

Advantages of the division of labour

1. More goods and services can be
produced.
2. Full use is made of everyones
abilities.
3. Time is saved
4. It allows the use of machinery.

Disadvantages of the division of

labour
1. Work may become boring.
2. Workers may feel alienated
3. People become too dependent upon
each other
4. Products are all the same.

Barter system and associated

problems
When one good is exchanged for
another it is known as Barter.
Problems associated
1. Fixing a rate of exchange
2. Finding someone to swap with.
3. Storing commodities

Shells-as barter

WHAT IS THIS?

What is Money?
Money is any commodity that is
willingly accepted in exchange for all
other goods and services.

The functions of money

1. Money is a
2. Money is a
3. Money is a
4. Money is a
payment.

medium of exchange.
measure of value.
store of value
means of deferred

Characteristics of good money

1. Acceptability
2. Durability
3. Portability
4. Divisibility
5. Scarcity

What is Money?
Exercise-7

 Thank you!