Text-study

1. Learn the following words

affect - воздействовать

available - доступный

borrow - занимать

consume - потреблять

consumption - потребление

deal with – иметь дело, рассматривать

demand - спрос

develop – развивать, разрабатывать

employee - служащий

equipment - оборудование

existence - существование

income - доход

goods - товары

scarce - скудный

output – выпуск продукции

scarcity - недостаток

utility – полезность

II. Answer the following questions

1. What is the very starting point of economic activities?

2. Why does every society have the problem of scarcity?

3. What do you understand by the term "utility"?

4. When did the development of the modern economics begin?

5. What do economists do?

6. Which ways of looking at economics exist?

III. Suggest the Russian equivalents for the words and word-combinations given below

A shop-keeper, a large amount of goods, to store, usefulness, value, to compare, human wants, choices, development, to solve, efficient, as a whole, to seek, society, to influence, economic forces.

IV. Match the words with their definitions

1) consumer	a) a big company, or a group of companies acting together as a single organization
2) corporation	b) the amount of money of usefulness that something has
3) value	c) the amount of money for which something is sold, bought, or offered
4) scarcity	d) someone who buys and uses products and services
5) price	e) the group of people who govern a country or state
6) government	f) a situation in which there is not enough of something
7) utility	g) the amount of money that something is worth

V. Choose one of the words from Exercise IV to make the sentences complete

1. There was a wider choice of goods for the ... .

2. The alterations doubled the ... of the house.

3. He works for a large American ....

4. The new military ... doesn't have popular support.

5. If you want to drink tea, it has ... for you.

6. They agreed on a ... Ј 2000 for the car.

7. There is a great... of qualified specialists in some agricultural

areas.

VI. Discuss the main economy types with your partner

VII. Speak on the problems any country experiences in the process of transition from planned economy to free market economy Unit 1.2. Market Economy

Read the text to fulfil the tasks

When the fastest-rising young rock group, the And-So-Forths, appeared in a televised concert, they wore old-fashioned saddle shoes. That week shoe stores around the country reported receiving calls for saddle shoes "like the And-So-Forths wear." Although some of the storekeepers thought the first customers to ask for the strange shoe style were joking, they soon got the message. Before long, saddle shoes could be seen in most of the nation's shoe stores.

The events described in the paragraph above probably would not have taken place in a traditional or a command economy. Changes in clothing styles in a traditional society could occur only over a period of many years. Those who make the decisions in a command economy might give in to public pressure and produce saddle shoes, but it is their decision to make. In a market economy, or free enterprise system as it is sometimes called, it is likely that if consumers really want saddle shoes, they will get them.

A market, or free enterprise, economy is one in which the decisions of many individual buyers and sellers interact to determine the answers to the questions of What, How and Who. In addition to buyers and sellers, there are several other essential elements in a market economy. One of these is private property. Speaking about "private property" we mean the right of individuals and business firms to own the means of production. Although markets exist in traditional and command economies, the major means of production (firms, factories, farms, mines, etc.) are usually publicly owned. That is, they are owned by groups of people or by the government. In a market economy the means of production are owned by private individuals. Private ownership gives people the incentive to use their property to produce things that will sell and earn them a profit. This desire to earn profits is a second ingredient in a market economy. Often referred to as the profit motive, it provides the fuel that drives sellers to produce the things that buyers want, and at a price they are willing to pay. The profit motive also gives sellers the incentive to produce at the lowest possible cost. Why? Because lower costs enable them to (1) increase their profit margins, the difference between cost and selling price, or (2) reduce prices to undersell the competition, or (3) both.

Economists often compare markets to polling booths. However, unlike the booths in which people vote for politicians, markets provide a kind of economic polling booth for buyers to cast their votes (in the form of purchases) for the goods and services they want. Producers interpreting the votes correctly by producing the things that buyers demand can earn profits. Those interpreting the voting incorrectly, producing too much or too little, or charging a price that is too high or too low, do not earn profits. In fact, they often lose money.

Consumer votes can be a matter of life and death to business in a market economy. As hundreds of thousands of followers of the And-So-Forths descended upon their local shoe stores in search of saddle shoes, the store managers did their best to find the hot new item. They did this because they knew that the sales of these shoes would add to their profits. Manufacturers soon learned about the calls for the new shoe style from their wholesale customers and did their best to satisfy the requests because they too were interested in profits.