<p> 1.1.5. Specialisation NAME:</p><p>Economics: the birth of a subject A brief timeline:</p><p>Circa 7 million years ago: The first hominids begin to appear Circa 4 million years ago: Some hominids starts to walk upright Circa 2.5 million years ago: Some hominids (Homo habilis) start to make crude stone tools and perhaps start to trade them within their group (the start of Economics?!) Circa 1.5 million years ago: Hominids (Homo erectus) start to use fire and to make more complex tools Circa 130,000 years ago: Modern humans (Homo sapiens) start to appear. They were foragers who lived in small groups of relatives. Violence between groups was the norm. Circa 35,000 years ago Some groups adopted a more settled lifestyle becoming hunter-gatherers. Some trade between groups. Homo sapiens was the only hominid species to develop:  trade with strangers/non-relatives  a division of labour This may have given Homo sapiens an advantage over other hominids such as the Neanderthals Circa 12,000 years ago Permanent settlements develop – hunter-gatherers became farmers – agriculture increased food supply and made towns and cities possible. This was made possible by:  trade with strangers/non-relatives  a division of labour 250 years ago The wealth creation capabilities of humans suddenly exploded delivering unsurpassed standards of living and life expectancy</p><p>Adam Smith (1723-1790) witnessed the start of the process of rapid wealth creation from the mid-18th century. In 1776, he published The Wealth of Nations. Smith observed that trade and specialisation go together: 1. people, through their labour, turn raw materials into useful products which others want and are prepared to pay for – trade makes an exchange possible</p><p>2. people get richer if the number of useful products per person per hour increases (i.e. increasing labour productivity makes us better off)</p><p>3. the key to increasing labour productivity is the division of labour and specialisation </p><p>Tasks 1. Explain why the possibility of trading a product might provide an incentive to produce (4 marks)</p><p>2. Explain how increasing productivity should make the producer better off (4 marks)</p><p>3. Explain how the division of labour should increase productivity (4 marks)</p><p>HINTS: look at how many marks there are per question and write in full sentences. The word/phrases in bold should be defined.</p><p>Don’t forget to: PRINT OUT THE NEXT SLIDES</p>