2. According to the text, mark these statements t (true) or f (false).

1. It is important only for economists to be informed about the economy.

2. Economics is the study of making choices.

3. Economics aims to explain how economies work.

4. Microeconomics deals with unemployment and inflation.

5. Macroeconomics examines the economic behaviour of individuals and firms.

6. National economy is the study of how a nation can be made wealthy.

7. It is not valid when each country concentrates on the production of one thing it can do best.

8. International economics predicts production, trade and investment across countries.

3. Give the best definition for the following economic terms.

Economy, economics, world economics, world economy, scarcity of goods, market, allocation of resources, economic stability.

4. Choose the variants that best explain the idea of the sentences below.

1. Economics is the study of systems of production and distribution - which are called economies – and of their fundamentals, dynamics, and results.

1. Economics examines markets and their role in satisfying people’s needs.

2. Economics explains how economies work, how natural resources, machinery and people’s labour are used.

3. Economics aims at studying economic behaviour of agents, firms and individuals.

2. A society worthy of its name requires an orderly system of producing and distributing the necessities and luxuries of life.

1. The system of production and distribution depends on the name of the society: capitalist, socialist, communist, etc.

2. The system of production and distribution is ordered by the government.

3. The system of production and distribution is well-structured and aims at meeting the needs and wishes of people.

5. Give profound answers to the following questions.

1. Why can economics be regarded as the study of making choices?

2. What is the relationship between the way our economy does and the way our people do?

3. What is a market?

4. What is any country’s national economy concerned with?

5. What is world economy? What is world economics?

6. Practise reading §5 of the text. Translate it into Russian. Give a short summary of it.

C. How the text is organised

1. What do these words refer to in the text?

1) it (§ 1); 2) which (§ 4); 3) its (§ 5); 4) it (§ 6); 5) that (§ 6)

2. Find the paragraphs of the text dealing with the following concepts.

1) international trade theory; 2) the concept of business economics; 3) the subject and the aims of economics; 4) a market concept; 5) the importance of being informed about the economy.

V. Additional Reading

Read the following texts to learn more about the problem under discussion.

Basic Economic Concepts

Economic products command a price and satisfy wants and needs. Economic products include goods and services. A good is a tangible economic product that is useful, relatively scarce, and transferable to others. Examples of goods include books, bicycles, and computers. There are many types of goods. A capital good is a good producers use to make other goods and services, such as a machine in a factory. A consumer good, on the other hand, is intended for final use by consumers rather than businesses. Consumers are the people who use, or consume, goods and services to satisfy their wants and needs.

Goods can be further grouped into two categories: durable and nondurable. A durable good lasts for at least three years when used regularly. Durable goods can include capital goods and consumer goods. A nondurable good is a good that lasts for fewer than three years when used regularly. Food and clothing are examples of nondurable goods.

Unlike a good, a service is an item that cannot be touched. A service is work or labour performed for someone else, such as the work performed by engineers, plumbers, or entertainers.

Some goods and services are more valuable than others. Value describes the monetary worth of a good or service as determined by the market. The paradox of value refers to the contradiction between the high value of some nonessential items and the low value of some essential items. For a good or service to have value, it must be scarce and have utility. Utility is a product’s ability to be useful and to provide satisfaction. People evaluate the utility of a particular good or service differently. When people or nations have a large number of valuable and tangible economic goods, they have wealth.

The exchange of goods and services between consumers and businesses forms a circle. In economics, a market is any meeting place or mechanism that allows buyers and sellers to make an exchange. Individuals begin the circle in factor markets, or markets where the factors of production are bought and sold. There individuals earn income by selling their labour to businesses in the factor market. After individuals receive wages or salaries, they spend it in the product markets, or markets where goods and services are bought and sold. Businesses complete the circle when they use the funds generated by sales to produce more goods and services.