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Economists describe these kinds of trade0offs as opportunity costs. The op-
portunity cost of something is the cost measured in terms of what you have to give
up to get it. Thus, opportunity cost of CD player in the example above would be
new sneakers.
Business is also faced with the problem of choices and opportunity costs. In
planning an advertising program, for example, a local store might have to choose
between a newspaper ad or direct-mail campaign. If it puts its efforts into newspaper advertising, the opportunity cost is the benefits of a direct-mail campaign.
Like individuals and business firms, government also pays opportunity costs.
If, for example, the federal government chooses to increase its spending for roads
by reducing the number of warships to be built, the opportunity cost of the improved road network would be a more powerful navy.
II
The Basic Economic Problem
The central problem of economics to determine the most efficient ways to allocate the factors of production and solve the problem of scarcity created by socie-
ty’s unlimited wants and limited resources. In doing so, every society must provide
answers to the following three questions:
What goods and services are to be produced, and in what quantities are they
produced?
How are those goods and services to be produced?
Who will receive and consume (get to use) those goods and services?
What goods and services are to be produced, and in what quantities are
they produced? Individuals and societies can obtain things by producing them
themselves, exchanging things that they already own for them, or receiving them as
gifts. Since a society cannot have everything, it must decide which goods and services it will have now and which ones it is willing to postpone having or give up
completely. For example, there are those who say that the United States should put
more of its efforts into improving production of basic commodities, such as automobiles and steel. They wish to prevent the further loss of trade to competitors such
as the Japanese. In order to achieve this goal, they urge our nation to devote more
efforts to developing basic goods and services rather than luxury items.
Sometimes the choices can be quite difficult. For example, there are nations
today, known as less-developed countries (LDS’s), that are so poor it takes the ef-
fort of most of their labour force just to feed and clothe their people. For such a
society to raise its living standards it would be necessary to increase production
beyond present levels. But if everyone in the country is already working at a fulltime job, how can total production be increased?
One way to increase total production in the future would be to modernize.
This might require shifting workers out of the production of food and clothing and
into the production of additional capital such as machines, tools and factories. To do
so, however, would mean that less food and clothing would be produced for present
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use in order to increase output some time in the future. For a nation with large numbers of people living in poverty even the slightest reduction in the food supply could
trigger widespread hunger. Fortunately, there are many international agencies and
generous nations, such as the United States, that have provided aid to the LDC’s,
helping them modernize while feeding their people.
How are those goods and services to be produced? There is more than one
way to build home or schools, manufacture an automobile, or farm a piece of land.
Will the school consist of many stories or one floor? Will the automobile assembly
line use robots? How much farm land will be used for corn and how much for
wheat?
With the exception of the school building, which in most instances would be a
government project, all these questions would be answered in this country by private individuals. In other parts of the world, however, how to manufacture an automobile might well be a decision made by the government. As for farming practices,
some societies leave that to the government to decide, others follow long-honored
traditions, while in still others the farmer decides.
Who will receive and consume (get to use) those goods and services?
Since there will not be enough produced to satisfy everybody’s wants, some way
will have to devised to determine how the output is divided. Who, for example, will
get to ride in limousines; who will have to use public transportation; and who will
have to walk?
Society has answered these questions in many ways. In some countries those
of noble birth are entitled to a large share of the nation’s output than others. In other
countries membership in a particular political party has been the key to wealth.
Here, in the United States, the market system and the ownership of wealth are the
key elements in determining who will be rich, middle class or poor.
III
Prices in the Market Economy
Prices perform two important economic functions: they ration scarce resources, and they motivate production.
As a general rule, the more scarce something is, the higher is price will be,
and the fewer people will want to buy it. Economists describe this as the rationing
effect of prices. In other words, since there is not enough of everything to go
around, in market system goods and services are allocated, or distributed, based on
their price. Did you ever attend an auction, or see one conducted on TV? What you
saw was the rationing effect of prices in action. The person leading the sale (the
“auctioneer”) offered individual items for sale to the highest bidder. If there was
only one item, it went to the single highest bidder. If there are two items, they went
to the two highest bidders, and so on.
Price increases and decreases also send messages to suppliers and potential
suppliers of goods and services. As prices rise, the increase serves to attract additional producers. Similarly, price decreases drive producers out of the market. In
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this way prices encourage producers to increase or decrease their level of output.
Economists refer to this as the production-motivating function of prices.
But what causes prices to rise and fall in a market economy?
Demand
The law of demand. Demand is a consumer’s willingness and ability to buy
a product or service at a particular time and place. If you would love to own a new
pair of athletic shoes but can’t afford them, economists would describe your feeling
as desire, not demand. If, however, you had the money and were ready to spend it
on shoes, you would be included in their demand calculations.
The law of demand describes the relations between prices and the quantity of
goods and services that would be purchased aе each price. It says that all else being
equal, more items will be sold at a lower price than at a higher price.
There are some reasons why demand behaves in this or that way:
More people can afford to buy an item at a lower price than at a higher price.
At a lower price some people will substitute one item for other items, thereby
increasing the demand.
At a higher price some people will substitute other items for the first ones.
After a certain point is reached, the satisfaction derived from a good or service will begin to diminish. Economists describe this effect as diminishing mar-
ginal utility. “Utility” refers to the usefulness of something. Thus “diminishing
marginal utility” is the economist’s way of describing the point reached when the
last item consumed will be less satisfying than the one before.
Diminishing marginal utility helps to explain why lower prices are needed to
increase the quantity demanded.
Elasticity describes how much a change in price affects the quantity demanded.
How elasticity is measured. When the demand for an item is inelastic, a
change in price will have a relatively small effect on the quantity demanded. When
the demand for an item is elastic, a small change in price will have a relatively large
effect on the quantity demanded.
Elasticity can also be measured by the “revenue test”. Total revenue is equal
to the price times the number of units sold. If, following a price increase, total revenue falls, the demand would be described as elastic. If total revenue were to increase following a price increase, the demand would be inelastic.
Similarly, if total revenue increased following the price decrease, demand
would be elastic. If the price decrease led to a decrease in total revenue, the demand
for the item would e described as inelastic.
Why the demand for some goods and services is inelastic.
They are necessities.
It is difficult to find substitutes.
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They are relatively inexpensive.
It is difficult to delay a purchase.
What are some factors that would cause the demand to increase or decrease?
Change in the environment.
Chang in the item’s usefulness.
Change in income.
Change in the price of a substitute product.
Change in the price or availability of complementary products.
Change in styles, tastes, habits, etc.
IV
Supply
Thus we have only spoken about the effects of prices on buyers. But it takes
two parties to make a sale: buyers and sellers. To the economist, supply refers to
the number of items that sellers will offer for sale at different prices at a particular
time and place.
The law of supply states that sellers will offer more of a product at a higher
price and less at a lower price.
Why does the quantity of a product supplied change if its price rises or falls?
The answer is that producers supply things to make a profit. The higher the price,
the greater the incentive to produce and sell the product.
When supply changes, the sellers will be offering either more (if supply has
increased) or less (if supply has decreased) of an item at every possible price. Any
or all of the following changes are likely to affect the quantity supplied.
If it costs sellers less to produce their products, they will be able to offer more
of them for sale. An increase in production costs will have the opposite effect –
supply will decrease.
Most producers can make more than one product. If the price of a product
than have been producing increases, many will shift their output to that product. For
example, as personal computers increased in popularity, a need developed for computer stands. As a result, many furniture manufactures began to produce desks and
carts specially designed for the computer market.
If producers expect prices to increase in the future, the may increase their
production now to be in position to profit later. Similarly, if prices are expected to
decline in the future, producers may reduce production, and supply will fall.
Equilibrium
The law of supply and demand tells us how many items sellers would offer at
different prices. By themselves they do not tell us at what price goods and services
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would actually change hands. When the two forces are brought together, however,
something quite significant takes place. The interaction of supply and demand will
result in the establishment of an equilibrium or market price. The market price is
the one at which goods and services will actually be exchanged for money.
The price at which supply exactly equals demand is known as the market
price, or the point of equilibrium.
The market price is the only price that can exist for any length of time under
perfect competition conditions. Perfect competition exists when the following conditions prevail:
Buyers and sellers have full knowledge of the prices quoted in the market.
There are many buyers and sellers so that no individual or group can control
prices.
The products are identical with one another. Therefore, it would not make
sense for buyers to pay more than the market price, or for sellers to accept less.
Buyers and sellers are free to enter or leave the market at will.
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RECRUITMENT
(Level II)
Unit IV
Recruitment
The search of a job can be divided into four stages. The first stage is knowing
yourself. The second stage is employment opportunities. The third one is writing a
resume & a letter of application. An interview comes last.
1. Knowing yourself. It means that before starting the search of a job you
should have a clear image of yourself to find a right position for you. The questions
below will help you in it.
What do you really want to be busy with?
How will the position you are looking for correspond to your academic qualifications, personal qualities and previous work experience?
Would you like to work independently or are you team oriented?
What are you strong and weak at?
Where are your special interests directed?
Would you like to be your own boss?
1) If you would like to be your own boss think of advantages & disadvantages it may have. The text below will help you. Make a list of positive and
negative sides of it.
I’m the boss!
The idea of being your own boss is very attractive. No more working for
someone else; no more orders; no prospect of being sacked or made redundant, and
time off whenever you feel like it. These benefits are, broadly speaking, true. Working for yourself means being in charge of your own destiny. If you succeed, then the
sky’s the limit for your ambitions.
However, self-employment can be extremely hard work and comes without the
certainty of a regular income or benefits such as sick leave and pension arrangements.
The hours are usually much longer – especially with the mountain of paper work to
get through – and of times it can be a lonely, thankless task.
Taking leave, at least in the early stages when you are unlikely to have any
staff to cover, will be impossible without loosing money. There are also the financial
risks. Thousands of young firms which started out with such promise go bankrupt
every year, having swallowed up their owners’ life savings and put them into years of
debt. So, if you see it as an automatic route to an easier life, perhaps you should think
again.
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2) After you have solved this problem, another question comes.
Do you think there is a single, right job for each of us or could we all do a
number of different jobs equally well?
3) Read the text below to find out how people normally choose jobs, ac-
cording to the writer.
How do you choose the right job?
A few people decide early in life what they want to do and then follow a prescribed path of training to reach their goal. More often, a young person takes the best
job available, and that leads to a lifetime in a particular field. Of course, both who
you know and what you know are important. Frequently an individual finds a job
through a friend, relative or other beneficial person. However, with a university degree the minimum requirement for many jobs — and advanced training and qualifications a must in most professional fields — what you know can be the ticket to a good
job.
There is probably no single 'right' job for anybody. Out of the estimated 20,000
types of occupations available in modern society, there are probably hundreds that
you could perform well and find rewarding. Although circumstances shrink one's
choices, there are still more possibilities than most people realise. Chance always
plays a part in finding a job you like, but vocational counsellors believe that a person
can improve the odds by analysing his or her ambitions, interests and inclinations.
One person may want to earn a lot of money. Others may set priority to being active,
helping people or having a low risk of becoming unemployed. Personal interests,
such as love of the outdoors or a fascination with computers, may point the way to a
job a person enjoys and respects.
Discuss these questions.
1. What has influenced you in your choice of your actual or potential career?
2. What other careers have you considered?
3. To what extent has chance or good luck played a part?
4. What jobs would you recommend for people with the following combina-
tions of qualities?
numerate, computer-literate, meticulous
patient, caring, physically fit
articulate, outgoing, persuasive
2. Employment opportunities. This stage includes gathering information
about vacancies. You can find such information in the employment agencies or in the
newspapers. Many companies hire employees by advertising in press. Pages with job
vacancies are usually headed “applications” or “job opportunities”.
147
Your main task is to understand whether the position offerred corresponds to
the level of your skills, education and experience in work. The structure of job
opportunities ads is usually the following: the name of the vacant position, the list of
the candidates’s professional duties, the demands made of the candidate, and the
system of compensations and benefits.
4) What is most important for you in a job? Choose the five most important feachers from this list and put hem in order of importance for you (most
important = number 1)
variety
doing something useful for other people
good prospects of promotion
job security
working in a team
a good salary
flexible working hours
job satisfaction
convenient location
pleasant surroundings
overtime possibilities
perks (e.g. company car, free health insurance)
independence
age of retirement
a good pension
plenty of time for other things outside work
What else do you look for in a job? Can you add items to the list?
5) Study ads below carefully & find out what they have in common. Compare and contrast them.
www.anglophile.ru
Anglia
British 'bookshop
CURRENT VACANCIES
PR Assistant to General Director
Requirements
University degree in humanities, modern languages;
pany;
At least two year experience in sales/marketing with an international com-
148
Excellent communication skills in English and Russian, German language
is a plus;
Good knowledge of contemporary English language literature;
Ability to cope with a low promotion budget;
Basic digital design skills.
Job description
Organizing literary events and authors' promotion;
Developing contacts with the English-language community in Moscow and
St Petersburg;
Developing of promotion materials;
Managing charity events, exhibitions, education and book fairs.
We offer
Flexible working hours (part-time is available);
Office place in the heart of Moscow;
Excellent carrier perspectives.
Please send your CV and application letter in English by March 31:
Fax: (095)2995416
email: askme@anglophile.ru
is currently looking for
REQUIREMENTS:
University degree in Linguistics
MANAGEMENT COMPANY
of large-scale
industrial holding
PERSONAL
ASSISTANT
2-3 years of experience with an industrial company
Fluent English, experience in simultaneous interpreting
Ability to work under pressure, strong communication skills
Willingness to travel across Russia
149
N. B. The Company also has
Secretarial vacancies
_____________________________
Please send your CV
in English by e-mail:
resume@imedia.ru,
subject PA
Independent Media
NEW MONTHLY BUSINESS MAGAZINE
"Harvard Business Review - Россия"
IS LOOKING FOR
Deputy Editor-in-Chief
MAJOR REQUIREMENTS:
Higher education
Prior experience as Editor in business press is essential
Fluent English
Excellent communication skills
Ability to search for publication topics and interesting authors
MAJOR RESPONSIBILITIES:
Writing and edition of local articles
Management of edition of foreign articles
Participation in Edition activities management
Please send your resume by fax: 232-17-61 ore-mail: HR@imedia.ru, Sub-
ject: Deputy Editor-in-Chief
Judging from the ads what are the most required abilities & skills that the ap-
plicant should possess?
Remember: in case you want to use an advertisment from the newspaper, you
should read it very carefully. If there is a mark “apply in person” it means that you
should apply directly to the company on the address given in the advertisment. If
there is only a telephone number there it means that you should contact the firm to
make an appointment. If there is only an address it means that you should send a
resume and a letter of application to the firm.
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