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Econ Videos 79 videos

Econ: What is a Production Possibilities Curve?
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What is a Production Possibilities Curve? The Production Possibilities Frontier Curve (PPF) is a statistical graphic curve that depicts the compari...

Econ: What are Income and Substitution Effects?
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What are Income and Substitution Effects? Income effects reflects the increases or decreases in total consumption of goods and services in proporti...

Econ: How Do Companies Add Value?
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How Do Companies Add Value? Companies add value by improving the client or customer experience. This can be achieved by offering better quality ser...

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Econ: What is Specialization of Labor? 21 Views


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00:00

and finance Allah shmoop What is specialization of labour All

00:08

right people While some of us are simply better at

00:11

math than others some of us are more creatively inclined

00:15

than others And some of us enjoy the social aspect

00:17

of a job While others prefer to be left alone

00:20

Teo titrate their chemicals and be left in peace and

00:23

quiet Well specialization of labour takes advantage of these differences

00:27

creating more value and higher overall output Well then without

00:31

specialization classical economist Adam Smith the guy who made the

00:35

invisible hand a thing saw the specialization of labour as

00:40

the driving force for economic growth Think about it all

00:44

of the engineers designers and marketers who went into creating

00:47

the very device you're on right now because they're able

00:51

to buy what they need to survive rather than fending

00:54

for themselves in the woods Well they can focus on

00:57

specialising their skills providing more value to the economy Hey

01:01

maybe that's myth Guy was on something right to really

01:04

see how much the specialization of labour affects the world

01:06

let's imagine a world without it So first people would

01:10

all be fending for themselves making their own clothes farming

01:13

their own food cutting their cutlery making their own video

01:17

gaming consoles and stuff like that but with specialization of

01:21

labour Well it allows us to focus our individual attention

01:24

in a particular specific area because other people specialize in

01:28

other things taking care of those things for us We

01:31

can also specialized for the rest of the market right

01:34

Well we all become experts of some sort by doing

01:37

our jobs and that activity increases productivity This is how

01:41

specialization of labour gives us absolute advantage in the market

01:45

We'Ll absolute advantages when one group can create a good

01:48

or service using fewer resource is than another group Example

01:52

If sewing Sally can so close with much less time

01:56

than you can it benefits both you and sewing Sally

01:59

If if you just let her make the clothes and

02:01

then buy them from her she's just plain better It's

02:05

sowing than you are so it's best for both of

02:07

you this way on a global scale Specialization of labour

02:10

gives us this absolute advantage For example southeastern Asian countries

02:14

will always be better pineapple and mango producers than North

02:18

American countries Global trade combined with specialization Let's each of

02:23

us produce what we produce best and that benefits everyone

02:26

Okay Second say goodbye to your smartphone computer refrigerator water

02:31

heater air conditioners cars airplanes bikes and the Internet Without

02:34

specialization of labour nobody would have gone deep enough in

02:38

the technological stack to make let alone imagine the technology

02:42

we have today So yesterday's technology breathes could graze the

02:46

much more advanced technology which then breeds more human capital

02:50

or intellectual capital Right Think about labor in terms of

02:53

opportunity Cost Is your time more valuable doing your job

02:57

Or is it more valuable forging steel into the shape

03:01

of a fork Well this is the stuff of comparative

03:04

advantage When a group or person can make a product

03:07

or service at a lower opportunity cost then can another

03:11

group or person Well even if you figured out how

03:13

to whip up a crappy fork how many lost hours

03:16

is that that you could have spent doing your job

03:19

But you're actually good at like how much money did

03:21

you lose tryingto make a four We're not saying you

03:24

shouldn't go fork forging or fishing or whatever thing it

03:26

is that you might do for fun that you aren't

03:28

very good at But we are saying that the value

03:31

that specialization of labour creates can be easily seen Once

03:34

you think about it in terms of opportunity cost well

03:38

a chef can provide a ton of value at a

03:40

restaurant Well that same chef Yeah not very much value

03:43

Add at a technology firm A tech bro can provide

03:46

Aton of value with the tech firm like Keats are

03:49

us But those people well they don't add much value

03:52

at a construction site All right what about a lawyer

03:54

who can type faster than her secretary Should she just

03:57

do all that typing herself No because a lawyer's time

04:01

is better spent loitering than it is typing Which is

04:04

why she hired her secretary in the first place Typing

04:07

is just a bad use of her way more valuable

04:10

time right Even if the lawyer is better a typing

04:13

than her secretary that opportunity costs for her secretary Typing

04:16

is much lower than it is for her loitering Well

04:19

comparative advantage shows us how specialization can help us all

04:23

add value to the market even though each have different

04:26

skills and skill levels Well the more specialized we all

04:29

are at what we d .'Oh well them or others

04:32

are willing to pay for that specialization and the more

04:35

value we're providing to each other within the economy While

04:38

specialization of labour has created a lot of value not

04:40

everyone's a fan Critics have cited that a too high

04:43

a level of specialization can lead Toa unhappy workers and

04:47

burn out probably does In fact the forty hour work

04:51

week became a thing on Lee after factory worker burnout

04:54

at the Ford factory caused extremely high turnover rate As

04:58

benefits of specialization spread globalisation started to make more and

05:02

more economic sense because the specialization of labour provide so

05:05

much more value to the economy than well if we

05:08

were all a bunch of hermits you know forging her

05:10

hone forks it's profitable to make things in one country

05:13

and ship them halfway around the world to be sold

05:15

in another country Absolute and comparative advantage make global trading

05:19

like this oh so worth it So today we can

05:22

see that event Siri's in the extreme With giants like

05:26

Amazon Walmart and Ali expressed facilitating globalization spreading the economic

05:31

fruits of specialisation on the insanely useful and maybe scary

05:34

We've got machines learning algorithms and artificial intelligence in the

05:38

works On the of course that's a thing side While

05:41

we've got heated driveways monster energy sliced ham and eighty

05:45

five dollars rock in a bag a toothpaste squeezer and

05:49

other things you didn't need to know that existed All

05:52

right just moving right along here people Where's

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