TEXT 1. SCARCITY AND CHOICE

When people are hungry, they want to eat. This is true regard-less of a person's social status, cultural heritage, or belief system. The one thing people have in common is that they ail have wants - not just for food, but for all kinds of things, from shiny floors to war paint. All people - not just selfish people - have wants. Altruistic people may want different things for different purposes (more time to devote to charitable causes or more food to give to the poor), but they still have wants. To satisfy these wants, people work to transform the earth’s resources into the goods they find desirable.

In modern societies, people have a wide variety of wants. Some, such as those for love and affection, cannot easily be classified as economic in nature. Others, such as food, clothing, shelter, medical care, entertainment, and even leisure time, are wants with major economic implications. Some wants are individual, whereas others, such as a family's desire for a home or a club's desire for a recreation center, are group wants. Many wants - such as the foregoing - are private, but others are public - such as society's wants for highways, education, and national defense.

For simplicity, we can say that economic wants are those that can be satisfied by the consumption of goods or services. We include the desire for leisure as an economic want because consumers need leisure time in which to enjoy the consumption of certain goods and services. Goods are physically tangible things such as food, shoes, cars, and houses. Services are intangible activities such as medical care, haircuts, and education. One fact that emerges clearly in the study of economics: people's wants for goods and services exceed society's capacity to produce them.

The tension between unlimited wants and the limited productive resources

available for satisfying these war.ts is what economists refer to as scarcity. Thus, stereos, hot dogs, education, and TV repair services are all considered scarce because many individuals desire these things, but their availability is limited. Scarce goods and services command a price in the marketplace. The price indicates how scarce goods are relative to other goods. Goods with high prices are relatively more scarce than goods with lower prices.

It is quite difficult to think of things that are not scarce. Some examples might include sand and water at the beach or the air we are breathing at this moment. But even air is scarce to the scuba diver or astronaut; and certainly clean air is scarce for the inhabitants of urban areas. It is safe to conclude that in economics, most things in this world are considered scarce. They are not freely available to individuals in unlimited quantities.

Unfortunately, the earth's resources are scarce; that is, there are more human wants than there are available resources to satisfy them. Moreover, once a decision has been made to use a resource in a way that satisfies one group, there may not be enough of it

left to produce something that another individual or group wants.

The basic economic problem confronting individuals, groups of individuals, and entire societies is that productive resources are limited relative to people wants. Thus arises the basic condition of scarcity. Scarcity requires people to make choices about how to utilize available resources most effectively in order to satisfy their wants. Since most major economic problems arise from the fact of scarcity, an understanding of this concept is the starting point for an understanding of economics.

Scarcity is the condition that results from the imbalance between relatively unlimited wants and the relatively limited resources available for satisfying those wants. No society has ever had enough resources to produce the full amount and variety of goods and services its members wanted.

1. Read and translate the text Before reading pay your attention to the following words and word combinations from the text

wants потреби

purpose призначення

economic wants економічні потреби

consumers споживачі

goods товари

services послуги

unlimited wants необмежені потреби

limited productive resources обмежені виробничі ресурси

scarcity дефіцит

scarce дефіцитний

the earth’s resources світові ресурси (природні ресурси світу)

members of society члени суспільства

Vocabulary exercises

2. Answer the following multiple-choice questions:

1. In economics, something is scarce when

1. no one wants it

2. you can get it at no cost

3. everyone has what they want

4. there is not enough for everyone to have all they want.

2. Which item is not a good or service?

1. Plants

2. Pencil

3. Garbage

4. Haircut

3. Which item is a service?

3. Book

4. Gold

5. Dress

6. Haircut

4. Business provides the goods and services we want by

5. saving them

6. wanting them

7. producing them

8. borrowing them

5. The basic theme in economics is _____

5. people have unlimited wants in the face of unlimited resources

6. people have limited wants in the face of unlimited resources

7. there are more resources than wants

8. people face limited resources with their limited wants

9. people face limited resources with their unlimited wants

1. Explain the following phrases taken from the text. Use a dictionary if necessary:

1. economic wants

2. scarce goods and services command a price in the market-place

3. the earth’s resources are scarce

4. major economic problems arise from the fact of scarcity

5. relatively unlimited wants

2. Determine which of the following statements are true and which are false. Correct those statements which are false.

1. Economists consider something to be scarce only if it is very expensive

2. Scarcity exists because many people do not have enough money.

3. Scarcity is the condition of not being able to have all of the goods and serv ices that you want.

4. Services are activities that can satisfy people’ wants.

5. If you won a million dollars in the lottery, you wouldn’t have the economic problem of scarcity.

3. Find the terms in the text which describe the following:

1. The desire that can be satisfied by consuming goods, services or leisure activity.

2. Tangible commodities that can satisfy people’ wants.

6. The money value of goods or services.

7. The social science that studies how people decide to use scarcc resources to satisfy their wants.

8. The condition that exists when wants exceed the resources available to satisfy those wants.

7. Answer the following questions:

9. What are economic wants?

10. What goods and services command a price in the marketplace and in what way?

11. What do people do to satisfy their wants?

12. Why can’t people have everything they want?

13. What does the imbalance between relatively unlimited wants and relatively limited resources result in?

14. Why is scarcity sometimes confusing to people?

15. Why are goods and services considered scarce?

16. Give examples of the problem of scarcity facing:

10. your family

11. your country.

8. Write a short summary of the text.

TEXT 2. FACTORS OF PRODUCTION

Every society is endowed with resources which are used to produce the goods and services that enable it to survive and prosper. These resources, sometimes called productive resources or factors of production, can be classified into three groups:

1. natural resources,

2. human resources,

3. capital resources.

Natural resources are the gifts of nature that are used to produce goods and services. They include land, timber, fish, oil and mineral deposits, the fertility of the soil, climatic conditions suitable for growing crops, afld so on. Some of these resources are used in the process of production, others renew themselves, while still others can be renewed through the conscious efforts of people.

Human resources are the health, strength, education, and skills of people. The number of people available for work and the hours they work constitute only one dimension of human resources. Another dimension is the level of ability of people and their motivation. The quality of human resources reflects past efforts to improve skills, knowledge, and motivation through education and training. The ability of some people to organize economic activity by taking the risks associated with starting a new

business or introducing new goods or services into the marketplace in hopes of earning a profit is given a special name, "entrepreneurship", which comes from a french word meaning "to undertake".

Capital goods are the buildings, equipment, machinery, ports, roads, dams, and other manufactured and constructed things needed to produce or provide access to other goods and to supply services. The variety of capital goods available and the ways they are used reflect the state of technology , which in turn reflects existing scientific and technical knowledge and the resources devoted to developing such knowledge. The study of economics explains how productive resources are used to provide the goods and services that satisfy human wants. Because productive resources are limited, the goods and services that can be produced from them are also limited. In contrast, the goods and services wanted by individuals and societies are virtually unlimited.

Thus scarcity is the central fact of our economic existence: the earth's resources are limited, human wants are not, and scarcity arises as the inevitable mismatches occur between the amount of resources required to produce all of the goods people want and the amount of resources that are available to produce those goods. Scarcity thus forces every society to make important choices:

1. what goods should it produce with its limited resources ?

2. how should these goods be produced?

3. how much of a resource should be devoted to production of one item versus another?

4. who should get the goods once they are produced?

The system a society uses for answering these questions - is its economic system.

/. Read and translate the text. Before reading pay your attention to the following words and word combinations from the text

productive resources виробничі ресурси natural resources природні ресурси human resources людські (трудові) ресурси capital goods засоби виробництва

economic existence економічне існування economic system економічна система Vocabulary exercises

1. Answer the following multiple-choice questions:

17. The three basic kinds of productive resources used to produce a house are:

12. capital resources, money resources, human resources

13. natural resources, human resources, capital resources

14. natural resources, capital resources, government resources

15. money resources, human resources, government resources

2. Which of the following is not considered to be a factor of production?

9. consumer demand

10. labour

11. natural resources

12. capital goods

3. A new factory to produce computers is an example of

18. natural resource

19. labour resource

20. capital resource

21. innovative resources

4. What do we call a person who organizes resources to make goods and services for a profit?

16. an inventor

17. a consumer

18. a buyer

19. an enterpreneur

20. an economist

5. What do we call manufactured goods that are used to produce other goods and services?

1. human resources

2. natural resources

3. capital resources

4. power resources

5. scarce resources

3. Explain the following phrases taken from the text. Use a dictionary if necessary’:

1. factors of production ,

2. the quality of human resources

3. entrepreneurship

4. the state of technology reflects existing scientific and technical knowledge

5. scarcity forces every society to make important choices

4. Determine which of the following statements are true and which are false. Correct those statements which are false.

1. There are enough productive resources to satisfy all of our wants

2. It is necessary to have all three factors of production for production to take place

9. Natural resources are present without human intervention.

10. The quality of labour resources can be improved through investments in education, training, and health care.

11. Entrepreneurship is a separate factor of production.

13. Find the terms in the text which describe the following:

22. Resources which are used to produce the goods and services that enable it to survive and prosper.

23. Gifts of nature that are used to produce goods and services.

24. The ability of some people to organize economic activity by taking the risks associated with starting a new business in hopes of earning a profit.

25. Manufactured and constructed things needed to produce or provide access to other goods and to supply services.

26. The approach a country uses to deal with scarcity and achieve its economic goals.

14. Answer the following questions:

21. What do we mean by the term “resources”?

22. How can resources be classified?

23. What do natural resources include?

24. What are human resources?

25. How can the quality of human resources be imported?

26. What is entrepreneurship?

27. What do we mean by the term “capital goods”?

28. What kind of resources can be renewed either themselves or through the conscious efforts of people?

29. What does the study of economics explain?

30. Can we consider scarcity the centra) fact of our economic existence? Why or why not?

31. What important choices does scarcity force every society to make?

15. Write a short summary of the text

TEXT 3. PRODUCTIVITY

Economic activity is directed toward a distinct goal: minimizing the pervasive effects of scarcity. In doing so, individuals and societies almost instinctively pursue economic activities which enable them to satisfy the most important of their wants using the fewest resources possible. This has never been an easy task, and has been fraught with much toil and hardship. The progress that has been made in minimizing the effects of scarcity has been largely due to a more efficient use of the productive resources in the production process. Production is the process in which productive resources are combined to create goods and services. It can be a relatively simple process, or it can be very complex, such as the production of an automobile.

Economists refer to finished goods and services as output. Productive resources are the inputs. The important concept, productivity, measures the amount of output produced relative to the inputs used. It is expressed as a ratio: productivity = input: output

Since labour (human resources) is a relatively easy input to measure and since it relates directly to wages and living standards, the term productivity usually refers to labour productivity and is measured in terms of output per labour hour worked.

In the long run, minimizing the effects of scarcity depends on increasing productivity. An increase in productivity means producing more goods and services with the same amount of resources, producing the same amount of goods and services with fewer resources, or a combination of these two possibilities. Societies that use their productive resources efficiently typically have higher standards of living. Health standards improve, and life expectancy increases. The basic economic problem of scarcity cannot be eliminated, but its effects can be reduced.

Economists have identified several ways to increase productivity and reduce the effects of scarcity:

12. adequate amounts of capital. Workers are more productive when they use tools, machines, and equipment. An adequate stock of capital for workers is necessary for high levels of productivity.

16. improvements in technology. A farmer using a tractor can produce more than a farmer using a hoe. A technologically improved stock of capita! has been the greatest factor in increasing productivity.

17. improvements in the quality of labour. Labour that is better trained and educated is more productive than unskilled labour. The increase in skills resulting from education and training is referred to as human capital.

18. Increased specialization and exchange. Because individuals are endowed with different skills and interests and because the time and resources necessary to learn new skills are scarce, there is a strong tendency toward specialization in the production of goods and services. This leads invariably to an increase in productivity. A cobbler specializes in making shoes, while a farmer specializes in growing food. They then exchange (trade) with each other to get the desired goods. By concentrating their talents and efforts in one area, they can produce more shoes and food than if each tried to produce both products.

Specialization is the basis of trade and exchange among individuals, businesses, cities, regions, and countries. Regions of countries, for example.

normally specialize in the production of those goods and services they are best fitted to produce, given their particular endowment of productive resources. They then sell most of what they produce to people living elsewhere, and buy whatever else they need from other regions. What they buy may include the raw materials needed to produce the goods and services in which they specialize.

Specialization also exists in specific production processes when workers perform different tasks. For example, in a law office, secretaries manage the office and do clerical work, while lawyers provide legal expertise. This specialization increases the total amount of legal services produced. The main point to remember is that at whatever level specialization occurs, the result is an increase in productivity.

A major consequence of increased productivity due to specialization and exchange is interdependence. The more individuals and nations specialize and trade, the more dependent they become on each other to supply their basic wants. Few of us grow all our own food; we rely on farmers. Farmers, in turn, rely on other producers to provide clothing and farm machinery. The complex web of interdependence that develops from trade among individuals and nations creates a strong incentive for social cooperation and peaceful coexistence.

Specialization in specific production processes (division of labour) also results in a high degree of interdependence. For example assembly line workers often perform highly specialized tasks, making them very dependent on their co-workers. Even in modem manufacturing plants, where individual workers often work in production teams, there is still a significant degree of specialization and interdependence.

Specialization and division of labour have some disadvantages however. In highly specialized production situations, a worker who is absent or inefficient can slow the whole production process. Also, for many people, producing one type of goods or services, or doing only one specific task in the production process can be monotonous. Creativity can be stifled. Workers and businesses must decide if increases in productivity through specialization and division of labour are worth the monotony and reduced creativity.

Read and translate the text. Before reading pay your attention to the following words and word combinations from the text

efficient use

the production process

finished goods

output

input

productivity

in terms of output per labour hour worked

розумне (продуктивне) використання

процес виробництва

кінцева (готова) продукція

випуск (продукції)

впровадження

продуктивність

в умовах випуску продукції на одну відпрацьовану робочу годину

an increase in productivity

standard of living life expectancy the effects of scarcity improvements in technology stock of capital

specialization in the production of goods

and services

trade and exchange

the raw materials

interdependence

social cooperation

peaceful coexistence

division of labour

assembly line workers

зростання (підвищення)

продуктивності

рівень життя

тривалість життя

наслідки дефіциту

вдосконалення технологій

основний капітал, основні виробничі

фонди

спеціалізація у виробництві товарів та послуг

торгівля та обмін сировина взаємозалежність суспільне співробітництво мирне співіснування поділ праці робітники-складачі