Scarcity wages interest rent choices systems resources

Lesson 1

First Insight into Economics

I. Topical vocabulary:

scarcity – недостатня кількість, брак чогось

E.g. Every society is faced with identical problem, the problem of scarcity.

to make choice – зробити вибір

E.g. Everyone goes through life having to make choices.

resources – ресурси

to satisfy one's wants – задовольняти чиїсь потреби

E.g. Human wants are unlimited, but the resources necessary to satisfy those wants are limited.

individual consumer – окремий споживач

E.g. Microeconomics is the study of individual consumers and the business firms.

to be faced with the problem – стикатися з проблемою

opportunity costs – можливі витрати

E.g. Business is faced with the problem of choices and opportunity costs.

private ownership – приватна власність

profit – прибуток

E.g. Private ownership gives people the incentive to use their property to produce things that will sell and earn them a profit.

II. Give English equivalents of the following:

приватна власність зробити вибір

прибуток задовольняти чиїсь потреби

можливі витрати ресурси

недостатня кількість витрачати гроші

окремий споживач стикатися з проблемою

досягти мети виробляти товари

III. Fill in the blanks with appropriate words:

scarcity wages interest rent choices systems resources

1. Everyone goes through life having to make choices.

2. The price paid for the use of land is called ________.

3. The price paid for the use of labor is called ________.

4. Traditional economic __________ are usually found in the more remote areas of the world.

5. Payment for the use of someone else's money, or capital, is called ______.

6. ________ exists because human wants are virtually unlimited, whereas the necessaries to satisfy those wants are limited.

7. The _________ or factors of production as they are called, are land, labor, capital and entrepreneurship.

IV. Read and translate the text:

Human wants are unlimited, but the resources necessary to satisfy those wants are limited. Thus, every society is faced with the identical problem, the problem of scarcity. Since there is not enough of everything to go around, everyone – individuals, business firms, and government – needs to make choices from among the things they want. In the process they will try to economize, to get the most from what they have. With this in mind we can define economics as the social science that describes and analyzes choices from among scarce resources to satisfy its wants. The need to choose is imposed on us by our income, wealth and ability to borrow.

The food you eat, the home you live in, the clothes you wear, and the way you spend your leisure time are all affected, in part, by economic forces. The study of economics will help you to live a fuller life. Economic forces also affect decisions in the world of business. The more you know about the subject, the better career decisions you will be able to make.

The development of modern economics began in the 17^th century. Since that time economists have developed methods for studying and explaining how individuals, business and nations use their available economic resources. Large corporations use economists to study the way they do business and to suggest methods for making more efficient use of their employees, equipment, factories, and other resources.

Economists have two ways of looking at economics and the economy. One is macro approach, and the other is the micro. Macroeconomics is the study of the economy as a whole. Microeconomics is the study of individual consumers and the business firm.

The resources that go into the creation of goods and services are called the factors of production. The factors of production include natural resources, human resources, capital and entrepreneurship. Each factor of production has a place in our economic system, and each has a particular function. Our country is rich in natural resources. Economists also use the term «land» when they speak of natural resources as a factor of production.

The price paid for the use of land is called rent. Rent becomes income to the owner of the land. Economists call the physical and mental effort that people put into the creation of goods and services labor or human resources.

The price paid for the use of labor is called wages. Wages represent income to workers, who own their labor.

Capital is something created by people to produce other goods and services. A factory, tools and machines are capital resources. The term capital is often used by business people to refer to money they can use to buy factories, machinery and other similar productive resources.

Payment for the use of someone else's money, or capital is called interest.

Closely associated with labor is the concept of entrepreneurship, the managerial or organizational skills used by most firms to produce goods and services. The reward to entrepreneurs for the risks, innovative ideas and efforts that they have put into the business are profits, whatever remains after the owners of land, labor and capital have received their payments.

In exercising the choices imposed upon individuals, business firms and governments by their unlimited wants and limited resources, every society must come to grips with the fundamental economic questions:

- What goods and services are to be produced?

- How are they to be produced?

- Who will receive them?

The way in which a society goes about answering these fundamental questions is known as its economic system. Economic systems may be classified as traditional, command or market systems. As the names suggest, resources are allocated (distributed) in a traditional economy in accordance with tradition and in a command economy by government planners. Resources in a market economy are allocated in accordance with the laws of supply and demand.

V. Answer the following questions:

1. Why must all societies deal with scarcity?

2. What is rent?

3. How can we define the term «economics»?

4. What is wages?

5. Why is the need to choose imposed on us?

6. What is interest?

7. What is microeconomics?

8. What is macroeconomics?

9. When did the development of modern economics begin?

10. What questions must every society provide answers to?

11. How do you understand the term «factors of production»?

VI. Define the terms:

Economics

Interest

Macroeconomics

Factors of production

Capital

Microeconomics

Wages

Labor and human resources

VII. Translate into English:

1. Бажання людини безмежні, а кошти, необхідні для здійснення цих бажань, надто обмежені. 2. Перед кожним суспільством постає проблема нестатку. 3. Економічні чинники впливають на рішення у світі бізнесу. 4. Ресурси, необхідні для утворення товарів і послуг, називають чинниками виробництва. 5. Заробітна плата – це та винагорода, яку отримують робітники за свою працю. 6. Купуючи фабрики, машини та інші засоби виробництва, ділові люди часто вживають термін «капітал». 7. Економіка – це наука, яка описує та аналізує вибір з-поміж недостатніх ресурсів, які мають задовольнити потреби населення. 8. Кожний чинник виробництва має місце в нашій економічній системі і кожний виконує відповідну функцію.

VIII. Read and dramatize the following dialogue:

P.: Hello, Bob!

B.: Oh, Peter, glad to see you. Haven't seen you for a long time! What have you been busy with, and what are you doing now?

P.: I'm a student of the Kyiv University. And what about you?

B.: You know, when I received my school leaving certificate, I decided to work at a plant and get a speciality.

P.: What speciality have you got?

B.: I'm a fitter now, I get good wages and I can support my mother. And now that I have become a skilled worker I think already I can combine my job with studies by taking correspondence courses or attending the evening faculty of an institute.

P.: What institute do you want to enter?

B.: I have thought about European University. I'd like to become an economist.

P.: Is it really interesting for you?

B.: Oh, yes, of course. I know that the studying of economics will help us to understand the economic forces better and enable us to live a fuller life.

P.: Do you know what is the basic economic problem?

B.: I think I do. The central problem of economics is to determine the most efficient ways to allocate the factors of scarcity created by society's unlimited wants and limited resources.

P.: But in doing so, every society must provide answers to the following three questions:

- What goods and services are to be produced and in what qualities are they to be produced?

- How are those goods and services to be produced?

- Who will receive and consume those goods and services?

B.: You are right. The way in which a society goes about answering these fundamental questions is known as its economic system. I'd like to study the economic system of our country.

P.: Now I understand you and I hope you will enter the institute and become a very good economist.

B.: Well, I am a bit hungry, why don't we have a snack together?

P.: Good idea. Let's go and have a snack in the cafe.

IX. Make up your own dialogue using the following expressions and word-combinations:

a limit to the resources the problem of scarcity

to make choices to purchase goods and services

to pay opportunity costs economic forces

factors of production the basic economic problem

X. Express doubt concerning the truth of the following statements:

Model: He understands your question. I'm afraid he doesn't understand your question.

1. You know his decision. 2. Everyone goes through life having to make choices.

3. Economic forces affect decisions in the world of business. 4. Large corporations use economists to study the way they do business and to suggest methods for making more efficient use of their equipment, factories, and other resources. 5. Each factor of production has a place in our economic system. 6. The study of economics helped me to understand the economic forces better.

XI. Ask about the following as in the model:

Model: Ask your friend if he knows what is the basic economic problem. Do you know what is the ba­sic economic problem?

1. Ask your friend if John knows the answers to the fundamental economic questions. 2. Ask your friend if rent becomes income to the owner of the land. 3. Ask your friend if he wants to study economics. 4. Ask your friend if economic forces affect decisions in the world of business. 5. Ask your friend if the resources go into the creation of goods and services.

XII. Translate into English:

1. Приватна власність дає людям стимул використовувати свою власність для отримання прибутку. 2. Економіка – це наука, яка вивчає специфіку розвитку економічних відносин в окремих сферах народного господарства. 3. Відношення власності на засоби виробництва утворюють основу економіки. 4. Мені цікаво знати, чи впливають економічні чинники на рішення у світі бізнесу. 5. Вивчення економіки дає мені можливість краще орієнтуватися в бізнесі. 6. Заробітна плата – це грошова винагорода за використану працю.