In an economy with a highly developed division of labour, workers specialise in extremely narrow tasks, such as producing a single component of an electronic device. This deep level of specialisation is only viable because the introduction of money as a medium of exchange overcomes which limitation of a barter system?
The lack of a standard of deferred payment, which prevents consumers from borrowing to purchase high-value durable goods.
The absence of a common unit of account, which prevents producers from calculating the relative prices and opportunity costs of specialised inputs.
The requirement for a double coincidence of wants, which becomes increasingly difficult to satisfy as the division of labour increases the variety of goods and services.
The inability to establish a stable store of value, which would otherwise cause the purchasing power of highly perishable specialised services to depreciate rapidly.
156 exam-style questions on AQA A Level Economics 1.4 Production, costs and revenue, covering 1.4.1 Production and productivity, 1.4.2 Specialisation, division of labour and exchange, 1.4.3 The law of diminishing returns and returns to scale (A-level only), 1.4.4 Costs of production, 1.4.5 Economies and diseconomies of scale, 1.4.6 Marginal, average and total revenue, 1.4.7 Profit, and 1.4.8 Technological change (A-level only). Each one has a worked solution and a mark scheme showing where the marks go.