Foundations of Economics. Учебное пособие

UNIT 3

WHAT DO WE NEED MARKETS FOR?

I. Topical vocabulary. Read the words.

-To bring together – ";

-Goods – ;

-Fruit stall – ;

-To transact – ( );

-Remote control – ;

-Short hand – ;

-Household – " ;

-To reconcile – , , ;

-Adjustment of prices – ;

-Machinery – " ;

-Labor – ;

-To adjust – , , , ,

;

-To ensure – , ;

-Scarce resources – ; ,

-" ;

-To demand – , ;

-To devote – - ;

-To enable – ", " ", ;

-Given – , ;

-Convenient – ;

-In favour of – , ;

-Viewpoint – ;

-Owner – , ;

-To be in business – " " ", ;

-Rent – ;

-Wage – ;

-At a profit – ( );

-To switch – ";

-Expense accounts – ;

-Executive – , ;

-Part-time job – ;

-Worth – - , - ;

-Conversely – ;

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-Unskilled – ;

-To allocate resources – ;

-To emphasize – ;

-Arrangements – "; , ", ";

II.Translate these words without a dictionary:

III.Skim the text. Try to understand the general sense.

THE ROLE OF THE MARKET

Markets bring together buyers and seller of goods and services. In some cases, such as a local fruit stall, buyers and we meet physically. In other cases, such as the stock market, business can be transacted over the telephone, almost by remote control. We need not go into these details. Instead, we use a general definition of markets.

A market is a shorthand expression for the process by which households' decisions about consumption of alternative go firms' decisions about what and how to produce, and workers' decision about how much and for whom to work and reconciled by adjustment of prices.

Prices of goods and of resources, such as labor, machinery and land, adjust to ensure that scarce resources are used to produce those goods and services that society demands.

Much of economics is devoted to the study of how markets and prices enable society to solve the problems of what, how, and for whom to produce. Suppose you buy a hamburger for your lunch. What does this have to do with markets and prices? You chose the cafe because it was fast, convenient and cheap. Given your desire to eat, and your limited resources, the low hamburger price told you that this was a good way to satisfy your appetite. You probably prefer steak but that is more expensive. The price of steak is high enough to ensure that society answers the "for whom" question about lunchtime steaks in favor of someone else.

Now think about the seller's viewpoint. The cafe owner is in the

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business because, given the price of hamburger meat, the rent and the wages that must be paid, it is still possible to sell hamburgers at a profit. If rents were higher, it might be more profitable to sell hamburgers in a cheaper area or to switch to luxury lunches for rich executives on expense accounts. The student behind the counter is working there because it is a suitable part-time job which pays a bit of money. If the wage were much lower it would hardly be worth working at all. Conversely, the job is unskilled and there are plenty of students looking for such work, so owners of cafes do not have to offer very high wages.

Prices are guiding your decision to buy a hamburger, the owner's decision to sell hamburgers, and the student's decision to take the job. Society is allocating resources - meat, buildings, and labour - into hamburger production through the price system.

These descriptions of markets are not very precise. And we have adopted a very general definition of markets which emphasized that they are arrangements through which prices influence the allocation of scarce resources.

TEXT ASSIGNMENTS

V.Answer the following questions:

1)What is the general definition of a market?

2)What is much of economics devoted to?

3)What are the examples of markets and prices functioning in terms of the seller and the buyer?

4)What is the role of prices?

5)What is the role of society?

1)In the stock market, business can be carried out over the telephone.

2)Shortly, the process by which households' decisions about consumption of alternative go firms' decisions about what and how to produce, and workers' decision about how much and for whom to work and reconciled by adjustment of prices is a market.

3)Most part of economics is dedicated to the study of how markets and prices enable society to solve the problems of what, how, and for whom to produce.

4)Prices of goods and of resources alter to ensure that scant resources

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are used to produce those goods and services that society demands.

5)Prices don’t influence your decision to buy a commodity.

6)It’s into hamburger production that society is allocating resources through the price system.

7)Prices don’t affect the allocation of scarce resources.

VII. Fill in the gaps with the words and word combinations in black type. Translate these sentences:

1)Much of economics … to the study of how markets and prices enable society to solve the problems.

2)Markets … buyers and sellers of goods.

3)The student behind the counter is working there because it is a suitable … which pays a bit of money.

4)Business can be … the telephone, almost by remote control.

5)It is still possible to sell hamburgers ... .

6)If the wage were much lower it would hardly … working at all.

7)…are used to produce those goods and services that society demands.

8)Society is allocating resources into hamburger production through

the … .

VIII. What are synonyms for the following words taken from the text. Give the translation. Make sentences with some of them:

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X.Give English equivalents to the following sentences:

1)– . ,

.

2)' " . .

3)H , , "

".

4)% ,

" , .

.

5)* . " - ",

- " , ,

.

6)0 " , -

.

7)1- "

".

8)% " .

9)&, "

.

10)1

, - .

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UNIT 4

PRODUCTION, COST, AND EFFICIENCY

I. Topical vocabulary. Read the words.

-,ost – , ( )", ;

-Input– , ;

-Output – , = " , ;

-Exchange– ";

-Rate– , ., , ;

-To include– ;

-Alternative – ;

-Haircut – ;

-vs.-( -. . . versus) – ;

-Investment goods – ;

-Defense – ;

-Mutually exclusive – "- - ;

-Opportunity cost – ( ) ;

-To refer to – " , ;

-Foregone – - , ;

-Relationship – , ";

-Scarce – , , ;

-To ensure – , , ;

-To weigh (against) – , ;

-To decide on – ;

-To be restricted to – " "- .;

-Monetary – - ;

-Benefit – , ;

-Labor service – ;

-Durable – , ";

-Intermediate goods – , " ;

-Final goods – ;

-To generate – , ;

-Desired – , ;

-Waste – , , - ;

- Allocative efficiency – . ;

-Better off – ;

-Applied economics – . ";

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-To concern smth.– - .;

-To recognize – ;

-To figure out – , ";

-Essence – - ;

II.Translate these words without a dictionary:

III.Skim the text. Try to understand the general sense.

PRODUCTION, COST, AND EFFICIENCY

In microeconomics, production is the conversion of inputs into outputs. It is an economic process that uses inputs to create a commodity for exchange or direct use. Production is a flow and thus a rate of output per period of time. Distinctions include such production alternatives as for consumption (food, haircuts, etc.) vs. investment goods (new tractors, buildings, roads, etc.), public goods (national defense, small-pox vaccinations, etc.) or public goods ( new computers, bananas, etc.), and “guns” vs. ”butter”.

Opportunity cost refers to the economic cost of production: the value of the next best opportunity foregone. Choices must be made between desirable yet mutually exclusive actions. It has been described as expressing "the basic relationship between scarcity and choice. The opportunity cost of an activity is an element in ensuring that scarce resources are used efficiently, such that the cost is weighed against the value of that activity in deciding on more or less of it. Opportunity costs are not restricted to monetary or financial costs but could be measured by the real cost of output forgone, leisure, or anything else that provides the alternative benefit (utility).

Inputs used in the production process include such primary factors of production as labour services, capital (durable produced goods used in production, such as an existing factory), and land (including natural resources). Other inputs may include intermediate goods used in production

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of final goods, such as the steel in a new car.

Economic efficiency describes how well a system generates desired output with a given set of inputs and available technology. Efficiency is improved if more output is generated without changing inputs, or in other words, the amount of "waste" is reduced. A widely-accepted general standard is Pareto efficiency (allocative efficiency), which is reached when no further change can make someone better off without making someone else worse off.

Much applied economics in public policy is concerned with determining how the efficiency of an economy can be improved. Recognizing the reality of scarcity and then figuring out how to organize society for the most efficient use of resources has been described as the "essence of economics," where the subject "makes its unique contribution."

TEXT ASSIGNMENTS

V.Answer the following questions:

1)What is the production?

2)What is the efficiency?

3)What does economic efficiency describe?

4)What is the opportunity cost?

5)What could opportunity costs be measured by?

6)What factors of production do inputs include?

7)When is allocative efficiency reached?

1)Opportunity cost is concerned with the economic efficiency of production.

2)How well a system generates desired output with a given set of inputs and available technology is described by economic efficiency.

3)Inputs used in the production process include such primary factors of production as capital, land and labour services.

4)A widely-accepted general standard is Pareto efficiency (allocative efficiency), which is reached when further change can make someone worse off without making someone else better off.

5)Most part of applied economics in public policy is concerned with determining how the efficiency of an economy can be improved.

6)Opportunity costs are not restricted to financial costs.

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X.Give English equivalents to the following sentences:

1)% – .

.

2)% – . , " ", = "

".

3)3 . " "

.

, .

5)# " - ",

"- -" ".

6)) ..

7), -"

" ".

8)5

,

".

9)) " .

10) / ,

" " -

",

.

XI. Retell the text using your plan.

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