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Файл:Экономика. Понятия, принципы, проблемы. Учебное пособие
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value judgemen
t
luxury n.
mean v.
meaning n.
objective n.
objective adj.
output n.
particular adj.
particulars n.
performance n.
predict v.
price n.
retail prices
quantify v.
rate n.
reasoning n.
reconcile v.
retain v.
satisfy v.
scarce adj.
sizable adj.
specifically adv.
stark adj.
strive (strove, striven) v.
survey n.
tax v.
term n.
in terms of
unravel v.
upswing n.
valid adj.
valuable adj.
variable n.
wages n.
whole
adj.
as a whole adv.
оценочное суждение,
субъективная оценка
роскошь
означать, значить
значение, смысл
цель, задача
объективный
вывод, выходные данные;
продукция, продукт, выпуск,
результат
особенный
частности
исполнение, деятельность,
работа
предсказывать, прогнозировать
цена
розничные цены
определять количество
норма, ставка; курс; темп,
скорость; процент;
коэффициент; показатель
рассуждение, аргументация
примирять, улаживать,
согласовывать
держать; удерживать,
аккумулировать; вмещать
удовлетворять
скудный, ограниченный
значительный, крупный
более точно, а именно,
особенно
полный, абсолютный
стараться, прилагать усилия
обзор, обозрение, обследование
налог
термин, срок, условия договора
с точки зрения
разгадывать, объяснять
подъем, улучшение
веский, обоснованный
ценный
переменная (величина)
заработная плата
целое
в целом
31
Unit 2
THE FUNDAMENTAL PROBLEM OF ECONOMICS
STARTING POINT
1. What do you think our basic necessities include?
Give examples of non-essential goods.
What factors determine the diversity of non-essentials?
2. Do you agree with the following statement?
The problem of scarcity will eventually disappear with the
development of new technology and resulting higher levels of
production.
3. Suppose you live by yourself on the island. Which of the
problems, what, how, and for whom would you not have to solve?
READING
1. Skim the text about the problem of economizing in economics.
Find an appropriate heading for each paragraph:
a) responses of world economic systems to the economizing problem;
b) mixed economy;
c) main points of economizing problem;
d) classification of economic resources;
e) material wants;
f) command economy;
g) pure capitalism.
1. Two fundamental facts provide a foundation for the field of
economics and, in fact, comprise the economizing problem. The first fact is
this: Society’s material wants, that is the material wants of its citizens and
institutions, are unlimited. Second: Economic resources – the means of
producing goods and services – are limited or scarce.
2. What do we mean by “material wants”? We mean the desires of
consumers to obtain and use various goods and services. Innumerable
products which we sometimes classify as necessities (food, shelter,
clothing) and luxuries (perfumes, yachts, mink coats) satisfy human wants.
Services satisfy our wants as much as do products. A repair job on our car,
the removal of our appendix, a haircut, and legal advice have in common
32
with goods the fact that they satisfy human wants. The differences between
goods and services are often less than they seem to be at first.
3. Economic resources can be classified into the following categories:
(1) property resources – land or raw materials and capital; (2) human
resources – labor. Let us examine these various resource categories. What
does the economist mean by land? Much more than do most people. Land
refers to all natural resources – all “gifts of nature” – which are usable in the
productive process. Such resources as arable land, forests, mineral and oil
deposits, water resources come under this general classification. What about
capital? Capital, or investment goods, refers to all manufactured aids to
production, that is, all tools, machinery, equipment, and factory, storage,
transportation and distribution facilities used in producing goods and
services. It is a man-made resource. Economists often talk of “ money
capital”, meaning money which is available for use in the purchase of
machinery, equipment, and other productive facilities. But money, as such,
produces nothing, hence, it is not to be considered as an economic resource.
Real capital – tools, machinery, and other productive equipment – is an
economic resource; money or financial capital is not. Besides, capital goods
should be distinguished from consumer goods. The latter satisfy wants
directly, whereas the former do so indirectly by facilitating the production
of consumer goods. What is labor? Labor is a broad term which the
economist uses in referring to all of the physical and mental talents of men
and women which are usable in producing goods and services.
4. We must recognize that a variety of different institutional
arrangements and coordinating mechanisms are used by a society in
responding to the economizing problem. The industrially advanced
economies of the world differ essentially on two grounds: (1) the ownership
of the means of production, and (2) the method by which economic activity
is coordinated and directed.
5. Pure, or laissez faire, capitalism is characterized by the private
ownership of resources and the use of a system of markets and prices to
coordinate and direct economic activity. In such a system each participant is
motivated by his or her own self interest; each economic unit seeks to
maximize its income through individual decision making. The market
system functions as a mechanism through which individual decisions and
preferences are communicated and coordinated. The fact that goods and
services are produced and resources are supplied under competitive
conditions means there are many independently acting buyers and sellers of
each product and resource. As a result, economic power is widely dispersed.
Advocates of pure capitalism argue that such an economy promotes
efficiency in the use of resources, output and employment stability, and
rapid economic growth. The term laissez faire translates as “let it be”, that
is, keep the government from interfering with the economy. Government’s
33
role is limited to the protection of private property and establishing an
appropriate legal framework to facilitate the functioning of free markets.
6. The polar alternative to pure capitalism is the command economy,
characterized by public ownership of all property resources and collective
determination of economic decisions through central economic planning.
All major decisions concerning the level of resource use, the composition
and distribution of output, and the organization of production are
determined by a central planning board. Business firms are governmentally
owned and produce according to state directives.
7. No country relies exclusively on the market mechanism to make its
economic decisions. The United States and most other countries rely instead
on the market for some decisions and on centralized decisions making (the
government) for others. The use of both market signals and nonmarket
directives is the hallmark of a mixed economy. The U.S. economy is
distinguished by a heavy reliance on the market mechanism. The Swedish
economy is also a hybrid system. Although over 90 percent of business
activity is in private hands, government is deeply involved in achieving
economic stability and in redistributing income. Other “mixed” economies
include a heavier dose of government intervention.
2. Scan the text and write the number of the paragraph where
you find the following information. Do it as quickly as possible:
___ private ownership of resources
___ collective determination of economic decisions
___ advantages of pure capitalism
___ central economic planning
___ government intervention
___ basic necessities
___ resource categories
___ investment goods
___ the essence of economizing problem
___ public ownership of the means of production
___ money capital
___ examples of mixed economic systems
___ grounds on which world economies differ
___ state directives
___ reliance on the market mechanism
___ distribution facilities
___ physical and mental abilities of human beings
___ production equipment
___ non-essential goods
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COMPREHENSION CHECK
1. Match a line in A with a line in B to define the following terms.
A B
1. Economic resources
2. Land
3. Capital
4. Labor
5. Command economy
6. Pure capitalism
7. Mixed economy
8. Ownership
9. Scarcity
a) A “gift of nature” including any valuable
mineral deposits.
b) Investment goods used to produce other
goods.
c) An essential element in all forms of
production. It represents all forms of work,
both physical and mental.
d) Legal possession of something, usually
something big and valuable
e) A situation in which the supply of something
is not enough for the people who want or
need it
f) A system with the private ownership of
resources and the use of markets and prices
to coordinate and direct economic activity.
g) An economy that relies on central planning
rather than decentralized markets.
h) An economy that uses market signals and
government intervention.
i) Means of producing goods and services.
2. Fill in the blanks using the words from the list in the bottom.
A. The science of economics centers upon two basic facts: first, human
material wants are 1) ______; second, economic resources are 2)______.
Economic resources may be classified as property resources 3) _______ and
4) _______ or as human resources 5) ______. Land comprises the natural
resources of the earth, the 6) _______. Land, in its economic sense, is a
7) ________ which, when combined with labor and capital produces goods
such as food and raw materials. Labor is divided into 8) ________ and
9) _______. Capital is a 10) _______ resource which is used to make further
production possible.
a) man-made, b. scarce, c) factor of production, d) unlimited, e) labor,
f) “gift of nature”, g) capital, h) mental, i) land, j) physical.
B. The various economic systems of the world differ in their
ideologies and also in their responses to the 1) _____. Critical differences
35
center upon 2) _____ versus 3) ________ ownership of resources and the
use of the 4) __________ versus 5) _______ as coordinating mechanism.
a) central planning, b) private, c) economizing problem, d) public,
e) market system.
3. Scan the text to find information to answer the questions.
1. What is the fundamental problem of economics?
2. What are economic resources?
3. How can economic resources be classified?
4. What is land in the economic sense?
5. Is money an economic resource?
6. What do industrially advanced economies of the world differ in?
7. How is economic activity coordinated in pure capitalism?
8. What is command economy characterized by?
9. What is the role of government in market and centrally planned
economies?
10. What is a hallmark of mixed economy?
4. Choose the answer from the alternatives.
1. The economizing problem is one of deciding how to make the best
use of:
a) unlimited resources to satisfy unlimited wants;
b) limited resources to satisfy unlimited wants;
c) unlimited resources to satisfy limited wants;
d) limited resources to satisfy limited wants.
2. The fundamental problem of economics is:
a) the scarcity of productive resources relative to material wants;
b) the establishment of prices which reflect the relative scarcities of
products and resources;
c) to establish an equitable system of personal and business taxation.
3. Because of their scarcity, the efficient use of resources is:
a) an important issue in all economies;
b) an important issue only in centrally planned economies;
c) an important issue only in market economies;
d) not an important issue.
4. Money is not considered to be an economic resource because:
a) money is not a free gift of nature;
36
b) money is not productive;
c) the terms of trade can be determined in nonmonetary terms.
5. The term “laissez faire” suggests that:
a) land and other natural resources should be privately owned, but
capital should be publicly owned;
b) land and other natural resources should be publicly owned, but
capital equipment should be privately owned;
c) government should not interfere with the operation of the
economy.
6. Economic scarcity:
a) applies to all economies;
b) is a characteristic feature of market economies;
c) is a characteristic feature of centrally planned economies.
7. The basic institutional-ideological differences among the
industrially advanced countries of the world center upon:
a) the relative importance of agriculture, manufacturing, and the
service sectors of the economy;
b) the ownership of resources and the method of directing and
coordinating economic activity;
c) varying rates of unemployment and inflation.
5. Mark the following statements as true (T) or false (F):
Statement T F
1. Economic problems arise because resources are limited,
but there are limitless human wants.
2. Money or financial capital is considered to be an
economic resource.
3. Human resources can be classified into mental and
physical resources.
4. Land comprises the natural resources of the earth, such
as forests, mineral and oil deposits.
5. Command economies rely on market systems and prices
to coordinate economic activity.
6. Products and services are scarce because resources are
scarce.
7. The term laissez faire means to keep the government
from interfering with the economy.
37
VOCABULARY
1. Find English equivalents of the following Russian word
combinations:
1) административно-командная
a) investment goods
система хозяйствования
2) организационно-техническая
b) production facilities
база сбыта продукции
3) проблема минимизации
c) command economy
издержек
4) средства производства d) property resources
5) материальные ресурсы e) manufactured aids
6) производственные мощности f) economizing problem
7) промышленные средства g) legal framework
8) общий объем производства h) total output
9) правовая система i) distribution facilities
2. Look through the text (p/ 33) and find the words which mean
the same:
a) a person who buys and uses goods and services (2);
b) too many to be counted (2);
c) land suitable or used for growing crops (3);
d) the act of buying (3);
e) far on in development (4);
f) to spread in different directions over a large area (5);
g) a person who speaks for or supports an idea (5);
h) opposite in kind, quality, etc. (6);
i) smth that may be taken or chosen instead of one or more others (6);
j) an official order or instruction (6);
k) a typical feature (7).
3. Match the words having the opposite meaning:
1) legal
2) advance
3) similar
4) private
5) mental
6) broad
7) stability
8) rapid
9) centralized
a) slow
b) physical
c) narrow
d) decentralized
e) regress
f) illegal
g) dissimilar
h) instability
i) public
38
4. What prepositions are used with the following verbs in the
text?
One verb has no preposition. Give the whole sentence as an
example.
to comprise
to have in common
to be classified
to refer
to talk
to be characterized
to keep
to be limited
to rely
to be involved
5. Read the text and insert the missing words or phrases from the
list below.
THE INVISIBLE HAND
Markets in which governments do not intervene are called free
markets.
Individuals in free markets (1)________, trying to do as well for
themselves as they can without any (2)_____ or interference. The idea that
such a system could solve the what, how, and for whom problems is one of
(3)________, dating back to Adam Smith, the famous Scottish philosophereconomist whose book The Wealth of Nations (1776) remains a classic.
Smith argued that individuals pursuing their self-interest would be led “as
by an invisible hand' to do things that are in (4)________.
Suppose you wish to become a millionaire. You play around with new
ideas and invent a new good, perhaps the television or compact disc.
Although motivated by self-interest, you (5)_______ by creating new jobs
and opportunities. You move society’s production possibility frontier
outwards – the same resources now make more or better goods – and
become a millionaire in the process. Smith argued that (6)__________,
without any central direction, could produce a coherent society making
sensible allocative decisions.
The circumstances in which the invisible hand works well are studied
in detail by modern economists. They also show that sometimes a free
market does not lead society (7)_______. Some government intervention
may then be justified.
a) the oldest themes in economics, b) pursue their own interests,
c) make society better, d) the pursuit of self-interest, e) to allocate resources
efficiently, f) government direction, g) the interests of society as a whole
39
6. Read the text and decide which answer A, B or C best fits each
space.
ECONOMICS AND EFFICIENCY
According to the basic 1)_____ of economics, it is the social science
concerned with the problem of using scarce resources so as to attain the
greatest or 2)____ fulfillment of society's unlimited wants. Economics is
3) ____ with "doing the best with what we have." If our wants are unlimited
and our resources are scarce, we cannot satisfy 4) ____ society's material
wants. The next best thing is to achieve the greatest possible satisfaction of
these wants. Economics is a science of efficiency – efficiency in the use of
scarce resources.
Precisely what is meant by efficiency as economists use the term?
It means something 5) ____ to the term "efficiency" as used in engineering.
The mechanical engineer tells us that a steam locomotive is only "
10 percent efficient" because a large part – some 90 percent – of the energy
in its fuel is not transformed into useful power but is 6) _____ through
friction and heat loss. The maximum output of usable power is not derived
from the inputs of fuel.
Economic efficiency is also concerned with inputs and outputs.
Specifically, it is concerned with the relationship between the units of
scarce resources which are put into the process of production and the
resulting output of some wanted product. More output from a given quantity
of inputs designates an increase in efficiency. Less output from a given
bundle of inputs indicates a 7) ____ in efficiency.
1 A
2 A
3 A
4 A
5 A
6 A
7 A
interpretation
majority
concerned
everything
same
spent
lessening
B
B
B
B
B
B
B
explanation
maximum
referred
all
alike
wasted
reduction
C
C
C
C
C
C
C
definition
most
considered
every
similar
vanished
decrease
WORD BUILDING
The words in bold type in the following sentence can be used to
form other words with different grammatical functions. Fill in the
numbered spaces in the table below. Then complete the text below it.
An econometric examination of the data can be used to quantify the
factors the model predicts.
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