Comments

1. wants and needs — бажання та потреби

2. factors of production — фактори виробництва

3. entrepreneurship — підприємництво

4. gifts of nature — дари природи

5. dramatic impact — вирiшальний вплив

6. wages — заробітна плата

7. income — дохід, прибуток

8. primary factor of production — первинний фактор виробництва

Text B

The third factor of production is capital — the tools, equipment and factories used in production of goods and services. It is a produced factor of production, a durable input which is itself an output of the economy. For example, we build a textile factory and use it to produce shirts, or assemble a computer and then employ it in educating students.

As noted earlier, such items are also called capital goods. This is to distinguish them from financial capital, the money used to buy the tools and equipment used in production.

Capital is unique in that, it is the result of production. A bulldozer may be an example of capital goods used in construction. At the same time, it was manufactured in a factory which makes it the result of earlier production.

When the three inputs — land, labour and capital — are present, production or the process of creating goods and services, can take place. Even the production of the service called education requires the presence of land, labour and capital.

Entrepreneurship, the managerial or organizational skills needed by most firms to produce goods and services, is the fourth factor of production. The entrepreneur brings together the other three factors of production — land, labour and capital. When they are successful, entrepreneurs earn profits, the return or reward for the risks, innovative ideas and efforts put into the business. When they are not successful, they suffer losses.

Comments

1. output — випуск, продукція

2. capital goods — засоби виробництва

3. financial capital — фінансовий капітал

4. at the same time — у той самий час, водночас

5. input — фактор, що впроваджується

6. managerial or organizational skills — організаційні або управлінські здібності

7. profit — прибуток

8. return or reward — прибуток або винагорода

9. to suffer losses — зазнавати збитків

U n I t 7

Text A

The survival of any society depends on its ability to provide food, clothing and shelter for its people. Since these societies are also faced with scarcity decisions concerning What, How and for Whom to produce must be made.

All societies have something else in common. They have an economic system or an organized way of providing for the wants and needs of their people. The way in which these decisions are made will determine the type of economic system they have. There are three major kinds of economic systems: traditional, command and market.

Traditional Economy

In a society with a traditional economy nearly all economic activity is the result of ritual and custom. Habit and custom also prescribe most social behaviour. Individuals are not free to make decisions based on what they want or would like to have. Instead, their roles are defined. They know what goods and services will be produced, how to produce them, and how such goods and services will be distributed.

An example of traditional economy is the society of polar eskimo of the last century. For generations, parents taught their children how to survive in a harsh climate, make tools, fish and hunt. Their children, in turn, taught these skills to the next generation. The main advantage of the traditional economy is that everyone has a role in it. This helps keep economic life stable and community life continuous. The main disadvantage of the traditional economy is that it tends to discourage new ideas and even punishes people for breaking rules or doing things differently. So it tends to be stagnant or fails to grow over time.