Unit two
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SCARCITY AND CHOICE: THE ECONOMIC PROBLEM |
Essential vocabulary
Ability n – the state of being able to do something – здатність, спроможність. Ability to borrow – спроможність брати в борг/кредитоспроможність.
Afford v (usually can/could afford) – to be able to spare or give up – дозволяти собі.
Allocate v – to use something for a particular purpose especially after an official decision has been made – розміщувати, розподіляти. Syn. to distribute.
As to prep – having relation to something – щодо, відносно, стосовно. Syn. as for, about, concerning.
Available adj – being able to be used or can easily be bought or found – наявний, що є в наявності, доступний.
Benefit n – something that promotes welfare – користь, вигода. Syn. an advantage.
Businessn – an organization that produces or sells goods or provides a service – компанія, підприємство. Business enterprise – торгівельно-промислове/ комер-ційне підприємство, business firm – комерційна компанія, торгова фірма, business owner – власник підприємства, business (economic) unit – господар-ська/організаційна одиниця. Syn. an enterprise, a firm, a company.
Cost n – the price paid or required for buying, producing, or doing something, usually measured in money, time, or energy – вартість; ціна. Syn. value. Аt no cost – безкоштовно, money cost – грошова вартість, opportunity cost – альтерна-тивна вартість, cost of living/tuition – вартість навчання/ проживання.
Costs n – an amount that has to be paid or spent to buy or obtain something – витрати, затрати. Syn. spending(s), expenditure(s).
Do one’s best – to perform a task as well as possible – докладати усіх зусиль, намагатися.
Face v – to come face to face with a difficult situation or problem one has to deal with – стикатися, поставати перед. Syn. to be faced with.
Forgo v – to decide not to have or do something, although you want to have it or do it; to go without – відмовлятися, утримуватись від чогось. Syn. to refuse, to give up.
Increase v – to make or become greater in size, number, amount, value, degree, price, etc. – збільшувати, зростати. Syn. to go up, to rise. Ant. to decrease, to lower, to reduce.
Individual n – a person, considered separately from the rest of the group or society that they live in –особа, людина. Syn. a person. Individuals– окремі особи, люди. Syn. people.
Limit (to) n – a point that may not or cannot be passed –межа. To set a/the limit to – встановлювати межу.
Limit (to) v – to stop something going beyond a particular point –обмежувати.
Meanv – to have or represent a particular; signify –значити, означати, мати значення.Syn. to denote.
Namelyadv– that is to say; to be specific (used to introduce detailed information or a specific example)– а саме, тобто. Syn. i.e., that is.
Opportunity n – afavourable, appropriate, or advantageous chance or prospect – слушна нагода, сприятлива можливість. Syn. a chance, a possibility.
Option n – a choice one can make in a particular situation –вибір; право вибору. Syn. an alternative, a choice.
Power n – the right to do something – право, повноваження. Borrowing power – кредитоспроможність, taxing power/power to tax – право оподаткування. Syn. authority.
Result from v – to happen or exist because something else has happened – бути результатом чогось, випливати з чогось, відбутися/статися внаслідок чогось.
Satisfy v – to cause someone to be happy from some desire or need by supplying what he desires, or needs –задовольняти. Syn. to meet.
Scarce adj – being insufficient or in limited supply to meet the demand – рідкісний; що рідко зустрічається; дефіцитний; недостатній. To be scarce – бути в недостатній кількості. Syn. limited.
Value n – the importance placed on something by an individual – цінність; вартість. Forgone value – вартість, від якої відмовляються. To have value – мати цінність/вартість. Syn. cost.
TEXT
The older we become, the better we understand that we can’t have everything. If we spend more on lunch we have less to spend on dinner. If we live in the country, we enjoy the beauties of nature but we spend more time to get to university or work. If a business produces advertising materials, it can’t publish scientific journals with the same resources. If a government spends more on modern medical facilities, it has to limit costs on improvements of roads. So, it means that everyone through their lives has to make choices from among the things they would like to have.
Most of the things we want or need are goods and services. Economists call them economic goods since they are scarce and have value to people. Other goods are not scarce – air, seawater, and sunshine – and called free goods. They are useful to people and available at no cost.
Since most of the things are scarce all business units, namely, individuals, families, businesses and governments, have to choose as to how to allocate and use them. Choices made by individuals and families depend on the size of their personal income, savings, wealth and ability to borrow. Business enterprises and firms, in turn*, are limited by their profits, savings and borrowing power, and governments by their taxing and borrowing power.
The necessity to make a choice results from the problem of scarcityof available resources. For most people, scarcity is a fact of life. Scarcity means that individuals as well as societies want more than is available.If people desired nothing, there would be no scarcity. If resources were great enough to produce more than anyone desired, there would also be no scarcity. Economists say that there is no limit to the amount and kinds of things that people want but there is a limit to theresources, available to satisfy unlimited humanwants. Thus, the problem of scarcity faces all people, businesses, governments.
Having limited financial resources school leavers can choose a full-time or part-time job as they can’t afford to get a university degree*. Business owners cannot hire all the workers and buy all the equipment and raw materials they require. Governments face some scarcity of finances despite their power to tax. Therefore, scarcity forces all levels ofdecision makers*, from individuals to society, to do their best to get the most from what they have.
The essential sense of scarcity is that everything we do has value. When you are doing one thing, you are using time and resources that cannot be used for the next most valuable thing you could have been doing*. The cost of doing more of one thing, then, is the value that is sacrificed by doing less of something else.
Economists refer to the value that is forgone every time we do something as opportunity cost. In fact, all costs are opportunity costs. We commonly think of cost as the money we spend to obtain something. But spending money on one thing is giving up the opportunity to spend it on something else.
For example, you have been dreaming of buying a windsurfing and at last you have accumulated enough savings to purchase it. But hydro cycle has become a thing of your dream, too. But you cannot afford to purchase both desired things as you simply don't have enough resources, namely, money. To the economist the choice you will make is a trade-off. Trade-off means that the decision to have one thing is, at the same time, the decision not to have something else.
Let's consider the cost of acquiring university education. Many school leavers think about going to university for four or five years. Obviously, the cost of tuition, the cost of books and different supplies, and the cost of living in a hostel represent the money cost of going to university.
If a person does not go to college, then he or she will probably find a job instead. Economists describe the money that those who choose university might have earned during their years of study as forgone earnings,but not the money spent on tuition and books. Thus, the opportunity cost of going to university is the goods and services represented by the money cost of the education, plus the value of the forgone earnings.
The cost of doing something often has nothing to do with spending money. For example, if you gave up the option of playing a computer game to read this text, the cost of reading this text is the enjoyment you would have received playing the game. Most of economics is based on the simple idea that people make choices by comparing the benefits of options and choosing the one with the highest benefit.
But there are two sides of the coin of opportunity cost. One is forgone value resulting from scarcity, and the other is opportunity. There would be no opportunity costs without opportunity. If there were only one thing you could do with your time and talents, there would be no cost of doing it.
So, the problems of scarcity, trade offs and opportunity costs are the main economic issues that any economic unit faces.
We as individuals and as a society are faced with scarcity (of raw materials and financial resources, of goods and services, of time, and so on) in relation to our ever-growing* needsand wants. It is economics that helps make our choices (a new car or tuition fees, more hospitals or more highways, more free time or more income from work) and gives a way of understanding how to make the best use of available resources to achieve our aims.