Specialisation can lead to a significant increase in output and international trade.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2014). The mark or mark type is shown in brackets.

1. [4] Up to 2 marks on the division of labour: the idea that specialisation involves the concentration on particular tasks, activities and products (1) carried out by individuals (1). Up to 2 marks: the key aspect is concentration of what can be done best (1) and it can apply to firms and regions and countries as well (1).
2. [6] Up to 4 marks on the benefits: Up to 2 marks: regions can concentrate or specialise in what they are good at (1) and this will involve making the most efficient use of the region's factor endowments and climate (1). Up to 2 marks: this will lead to an increase in output (1) and this will provide for an increase in incomes and living standards (1). Up to 2 marks: may enable the region to develop a reputation for providing the product (1), this may increase demand (1). Up to 4 marks on the disadvantages: Up to 2 marks: such specialisation could lead to a depletion in the factor endowments (1) and so would not be favourable in the long-run (1). Up to 2 marks: the region could be vulnerable (1) if new alternative products are produced/grown elsewhere more cheaply (1). Up to 2 marks: there may be a change in world economic conditions (1), making a region that specialises in just a few products vulnerable, leading to a rise in unemployment (1).
3. [10] Up to 7 marks on the benefits of international trade: Up to 2 marks: the concentration on the most effective use of resources (1) can lead to greater output (1), supporting table (1). Up to 2 marks: it can lead to a greater choice for consumers (1), improving standards of living (1). Up to 2 marks: the opportunity to participate in international trade will force domestic firms to be efficient (1), they will need to be as competitive as possible and this will lead to a reduction in unemployment (1). Up to 2 marks: it might be possible for such firms to benefit from economies of scale (1), reducing the costs of production (1). Up to 2 marks: if the value of the exports exceeds the value of the imports, this could lead to a favourable balance of trade (1), bringing more money into the economy than goes out (1). Up to 7 marks on the disadvantages of international trade: Up to 3 marks: the domestic firms may be less efficient than foreign ones (1) and this could lead to some of them going out of business (1), leading to an increase in unemployment (1). Up to 2 marks: the value of imports could be greater than the value of the exports (1), leading to a trade deficit (1). Up to 3 marks: foreign firms may use certain tactics (1) to establish themselves in a market, such as dumping (1), which could lead to domestic firms being undercut (1).