Title: Principles of Microeconomics/What Economics Is and Why It's Important - Wikibooks, open books for an open world
Headings: Principles of Microeconomics/What Economics Is and Why It's Important
Principles of Microeconomics/What Economics Is and Why It's Important
Contents
The Problem of Scarcity
The Division of and Specialization of Labor
Why the Division of Labor Increases Production
Trade and Markets
Why Study Economics?
Key Concepts and Summary
Self-Check Questions
Click on a question to see the answer.
Review Questions
Critical Thinking Questions
References
Glossary

Content: A similar pattern often operates within businesses. In many cases, a business that focuses on one or a few products (sometimes called its “core competency”) is more successful than firms that try to make a wide range of products. Third, specialization allows businesses to take advantage of economies of scale, which means that for many goods, as the level of production increases, the average cost of producing each individual unit declines. For example, if a factory produces only 100 cars per year, each car will be quite expensive to make on average. However, if a factory produces 50,000 cars each year, then it can set up an assembly line with huge machines and workers performing specialized tasks, and the average cost of production per car will be lower. The ultimate result of workers who can focus on their preferences and talents, learn to do their specialized jobs better, and work in larger organizations is that society as a whole can produce and consume far more than if each person tried to produce all of their own goods and services. The division and specialization of labor has been a force against the problem of scarcity. Trade and Markets
Specialization only makes sense, though, if workers can use the pay they receive for doing their jobs to purchase the other goods and services that they need. In short, specialization req