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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: