POSIBNIK_1_KURS

10.Робоча сила - це здатність людини до праці, результатом якої є продукт або благо.

11.Первинними факторами виробництва були земля і праця.

12.Капітал як фактор виробництва - це майно (засоби виробництва), що належать підприємцям або іншим власникам і використовуються в процесі створення товарів і послуг.

13.Особливістю капіталу є те, що він має бути кимось накопичений, створений.

14.Капітал існує лише у продуктивному використанні, саме тоді, коли його власниками одержуються доходи від користування та володіння своїм майном.

15.Обмеженнями використання інформації є здатність користувачів аналізувати, зберігати та відтворювати її.

LANGUAGE SKILLS

Ex.11. Ask questions to which the following sentences may be answers.

1.The choices about an economy’s use of its factors of production, the resources available to it for the production of goods and services.

2.The value, or satisfaction, that people derive from the goods and services they consume and the activities they pursue.

3.Labour, capital, enterprise and natural resources.

4.The human effort that can be applied to the production of goods and services.

5.People who are employed or would like to be.

6.A factor of production that has been produced for use in the production of other goods and services.

7.Office buildings, machinery, and tools.

8.The activities of profit-seeking decision makers who determine which economic activities to undertake and how they should be implemented.

9.The resources of nature that can be used for the production of goods and services.

10.It means all natural resources and agents, with their sites (locations and extensions in space).

11.The capacity of users to analyze, store and retrieve information.

12.Through the selection and compression of information into knowledge and wisdom.

Ex.12. Answer the following questions.

1.What are the choices concerning what goods and services to produce?

2.What does the term “utility” mean?

3.What are the factors of production in an economy?

4.What can be applied to the production of goods and services?

5.What does capital represent?

6.What are natural resources?

7.What does the factor of production land comprise?

8.What does economic land exclude?

9.Why is land supply fixed?

10.In what case will labour’s contribution to productive output increase?

11.What forms of labour are there?

12.What does demand for labour depend on?

13.What is the quantity of labour?

14.What forms of wages are there?

15.What are the salient characteristics of information?

Ex.13. From your local paper collect advertisements or articles for each of the factors of production. Labour should be easy - job vacancy adverts. But the others will be slightly more difficult.

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Ex.14. Make a presentation of the topic “Factors of production”.

WRITING

Ex.15. Write a plan of your summary based on Text A.

Ex.16. Using your plan as a base, write a brief summary (25-30 sentences) of the text. Ex.17. Write an essay (100 – 150 words) about:

-the importance of factors of production in an economy.

DISCUSSION POINTS

Ex.18. Discuss the following.

1.How many factors of production are there in an economy? Briefly define each factor of production.

2.Why are the factors interdependent? Explain.

3.What is capital? What is wealth? Give examples.

4.Why is land considered a passive factor of production?

5.How do capital and labour differ from land?

6.How has the workforce changed in Ukraine for the last 25 years?

7.What factors have contributed to those changes?

8.How have those changes affect your life and culture?

9.Why is it important to understand how terms are used in different contexts?

Ex.19. Consider the factors of production that went into the making of one sheet of notebook paper. Name some of them.

Example: Suppose you go to the supermarket and buy a box of corn flakes. Each of factors of production went into the making of this cereal. For example, some of the things used in the production and distribution of the corn flakes are: box-making machinery, fertilizer, a storage warehouse, prairie or farmland, farm machinery, delivery truck and driver, wholesale middleman, retail grocery store, store clerk, etc.

Ex.20. Look through product advertisements in magazines, on the internet, in newspapers, or elsewhere. Choose any two products to investigate.

Cut out the advertisement or draw a picture of each product. Design a chart titled “Factors of Production.” D o this for each product. List all of the resources (land, labour, capital, producer) utilized to create the product. Then, label each resource on your list as land, labour, capital, or business (producer / enterprise).

TEXT B: ENTREPRENEURSHIP

Ex.21. Scan the text below and give headlines to each paragraph.

Land, labour, capital, and entrepreneurship: (0) ____________ . Of course, in a literal sense anything contributing to the productive process is a factor of production. However, economists seek to classify all inputs into a few broad categories, so standard usage refers to the categories themselves as factors. (1)____________ Entrepreneurship is a fairly recent addition.

The factor concept is used to construct models illustrating general features of the economic process without getting caught up in inessential details. These include models purporting to explain growth, value, choice of production method, income distribution, and social classes. A major conceptual application is in the theory of production functions. One

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intuitive basis for the classification of the factors of production is the manner of payment for their services: rent for land, wages for labour, interest for capital, and profit for entrepreneurship.

This category sometimes extends over all natural resources. It is intended to represent the contribution to production of nonhuman resources as found in their original, unimproved form. For the French physiocrats led by Francois Quesnay in the 1750s and 1760s, land was the only factor yielding a reliable gain to its owner. In their view, labourers and artisans were powerless and in excess supply, and hence they earned on average only a subsistence-level income; and in the same way what they produced outside of agriculture fetched enough to cover only their wages and input costs with no margin for profit. Only in agriculture, due to soil fertility and other "gifts of nature," could a labourer palpably produce more than required to cover subsistence and other costs, so only in agriculture could proprietors collect surplus.

(2)____________ . They recommended taxes on land as the only sound way to raise revenue and land-grabbing as the best means to increase the government's revenue base.

In 1821 David Ricardo, in The Principles of Political Economy and Taxation, stated what came to be known as the classical view: that rent reflects scarcity of good land. The value of a crop depends on the labour required to produce it on the worst land under cultivation. This worst land yields no rent—as long as some of it remains unused—and rent collected on better land is simply its yield in excess of that on the worst land. Ricardo saw rent as coming from differences in land quality (including accessibility) and scarcity. The classical economists assumed only land—understood as natural resources—could be scarce in the long term.

Marginalism, as expounded in 1899 by John Bates Clark in The Distribution of Wealth, takes a different approach. It declares that rent reflects the marginal productivity of land—not, as with Ricardo, the productivity of good versus marginal land. Marginal productivity is the extra output obtained by extending a constant amount of labour and capital over an additional unit of land of uniform quality. (3) ____________ . Their theory is based on the possibility of substituting among factors to design alternative production methods, whereby the optimal production method allocates all the factors to equalize their marginal productivity with their marginal costs.

Long thought of as a self-sustaining input, land might depreciate just like produced assets do. In 1989 Herman Daly and Jonathan Cobb, in For the Common Good, distinguished between non-renewable resources that are consumed or depreciate irretrievably, and renewable resources where the rate of natural renewal is important. One consequence of this work in environmental economics is that natural resource accounting increasingly resembles capital accounting.

The classical "labour theory of value" was an innovative theory in response to the physiocratic doctrine that only land could yield surplus. In 1776 Adam Smith, in The Wealth of Nations, observed that with expansion of production and trade, enterprises were making profits over long periods of time, although they either had nothing to do with agriculture or else as agricultural enterprises. Classical economists tried to answer the question: Where does profit come from? (4)____________ . At prevailing prices, labour can yield a surplus over subsistence costs in many industries.

The question arises of why proprietors, but not labourers, earn profit. Ricardo arrived at one answer: Technical innovation increases labour productivity. Owners of innovative equipment, until its general adoption, get the premium from reduced costs. In 1867 Karl Marx in Capital, added that wages reflect the cost of subsistence, not what labourers can produce, and that profit is the difference between the two. Even without innovation proprietors would reap surpluses, Marx held, since labourers lack market power and cannot afford their own equipment.

Why do wages differ for different types of labour? Marx's answer was that higher wages cover costs, beyond personal subsistence, of training and cultivation of skills, acknowledging that one kind of "equipment," now known as human capital, was available at least to some labourers.

Marginalist economists noticed the advance of technology, which according to classical and Marxist views made labour ever more productive, continually throws labourers out of work.

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(5)____________ . Referring to equipment as capital, they developed production functions featuring labour and capital as substitutes for each other. Choice among production techniques involving different combinations of labour and capital became a major theme in marginalist growth theory.

This most controversial of factors is variously defined as produced equipment; as finance used to acquire produced equipment; as all finance used to begin and carry on production, including the "wage fund"; and as the assessed value of the whole productive enterprise, including intangibles such as "goodwill." In 1960 Piero Sraffa, in Production of Commodities by Means of Commodities, showed that capital in the sense of produced equipment can fail to behave as expected in marginalist production functions when an entire economy is modelled. Specifically, equipment adopted to replace labour after wages rise from a low level, relative to interest on capital, may be abandoned again in favour of labour as wages rise still higher. This counterintuitive "reswitching" can happen because the equipment used is itself a product of labour and equipment, and because the ratio of labour to equipment varies for different products.

Frequently capital is treated as finance, associated with the payment of interest. Yet the connection with equipment, in spite of Sraffa's demonstration, has never been severed entirely. One still studies capital depreciation, distinguishing wear-and-tear from obsolescence, and from the present value of investments in capital. (6) ____________ . Furthermore, acquired skills (as opposed to "know-how," an attribute of society rather than individuals) have come to be viewed as analogous to physical equipment, capable of yielding their owners a return. This analogy suggests their current designation as human capital. Thus capital is a concept still mired in confusion, and care must be taken in its use to be sure what it means.

Until the twentieth century, this function was assigned to the capitalist and frequently conflated with capital. In the classical view, profit rather than interest was attributed to ownership of capital. In the marginalist view, capital earned interest, and profit was a mere residual after all the factors of production were compensated. In his Principles of Economics, first published in 1890, Alfred Marshall made extensive references to "organization" and "management," referring to the coordination function of entrepreneurship but to neither riskassuming nor innovation. But in 1912 Joseph Schumpeter, in The Theory of Economic Development, featured the revolutionary role of organizer and innovator and contrasted it with that of the conservative financier, thus vividly distinguishing the entrepreneur from the capitalist. The entrepreneur's role in this view is not merely that of manager and risk-taker, but also of visionary - someone who seeks as much to destroy the old order as to create something new. Since innovation usually requires destroying old ways of doing things, Schumpeter gave it the name "creative destruction." Profit is now assigned to entrepreneurship, to innovation. With the rise of "venture capitalists" and other financiers willing to take on more risk and do more for innovation in the hope for supernormal returns, the distinction between capitalist and entrepreneur has again become fuzzier. (7)____________ . Although in business usage stock dividends are distributed profits, in economic analysis they figure as returns to capital, a kind of interest payment, since they are a return to finance rather than to entrepreneurship. The fact that stocks are legally equity rather than debt shares is thereby ignored. Similarly, salaries of corporate executive officers are treated as profit, a return to entrepreneurship, rather than as wages for labour services.

Ex.22. Read the text. Choose the best sentence A-G to fill each of the gaps 1-7. Do not use any sentence more than once. There is an example at the beginning.

0 These are four generally recognized factors of production.

AIncreasingly, theory has come to treat any investment as a capital investment.

BBefore the twentieth century, only three factors making up the "classical triad" were recognized: land, labour, and capital.

CNow there are entrepreneurial financiers as well as entrepreneurial producers and distributors.

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DMarginalists held that any factor of production could be scarce.

ETheir answer was that it came from labour.

FThis led them to attribute productivity to equipment rather than only to labour.

GThus the physiocrats explained land rent as coming from surplus produced by the land.

Ex.23. Read the text again and decide whether the following statements are true or false. Correct the false statements.

1.Entrepreneurship is a fairly ancient addition.

2.A major conceptual application is in the theory of production functions.

3.For the Spanish physiocrats led by Francois Quesnay in the 1750s and 1760s, land was the only factor yielding a reliable gain to its owner.

4.The classical economists assumed only land—understood as natural resources—could be scarce in the short term.

5.Marginal productivity is the extra output obtained by extending a constant amount of labour and capital over an additional unit of land of uniform quality.

6.Classical economists tried to answer the question: Where does profit come from?

7.Technical innovation decreases labour productivity.

8.Choice among production techniques involving different combinations of labour and capital became a major theme in classical growth theory.

9.Frequently capital is treated as finance, associated with the payment of interest.

10.In the marginalist view, profit rather than interest was attributed to ownership of capital.

Ex.24. Answer the following questions.

1.What is the factor concept used for?

2.Where could proprietors collect surplus (for the French physiocrats)?

3.What does the value of a crop depend on?

4.What does rent reflect (in the marginalist view)?

5.What question do classical economists tried to answer?

6.What increases labour productivity?

7.What became a major theme in marginalist growth theory?

8.How is capital defined?

9.How is capital treated frequently?

10.What is the entrepreneur's role in The Theory of Economic Development?

TEXT C: FACTORS OF PRODUCTION FOR AN INNOVATION ECONOMY Ex.25. Before reading

Can you anticipate what an innovation economy is?

Ex.26. Reading

(1) Many years ago, economists from the industrial revolution identified three variables (productive inputs) for building industries; Land, Labour, and Capital. The rate of output was related to how these inputs were combined. If any of these factors of production were missing, the other two had little or no utility for production. The concept of Land, Labour, and Capital is still the foundation of much of today’s economic thought.

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To demonstrate how these productive inputs might appear in an innovation economy, consider the following example:

(8)Suppose that we take 5 mechanical engineers and lock them in a room with instructions to build a better mouse trap, they’ll emerge with a better shingle, a better spring, a better whacker, and a better trigger – but not necessarily a better mousetrap. Suppose that we now put a dog catcher, an engineer, a plastics manufacturer, an artist, and the mother of 4 rowdy children together with the same task. We can be quite certain that innovation will occur. They may actually come up with an excellent mouse trap.

(9)Innovation Economics will bring the factors of production together in diverse combination rather than similar combination. In an Innovation Economy, the “secret sauce” for the production of innovation becomes far more valuable than any single innovation itself. The secret sauce provides a monopoly on dynamic repeatability rather than a static device. As such, technologies can be open sourced and innovation crowd sourced across a much wider domain of possible user applications. Such conditions will change the type of innovations that are favoured to reflect the broad and sweeping social priorities rather than innovations that are easy to patent, protect, and monopolize.

Task 1. Discuss what Dan Roblescould mean when he said that the rate of output was related to how the inputs (Land, Labour, and Capital) were combined. (para. 1)

Task 2. Explain how you understand Dan Robles’s ‘knowledge economy’.(para. 2) Task 3. If something is innovative, is it

a)recently made, built, invented, written, designed etc;

b)more difficult to understand;

c)new, different, and better than those that existed before?

Task 4. How does the author describe Intellectual, Social and Creative Capital? (paras 3-

6)

Task 5. What does the author mean by “mouse trap building”? (para. 8) What place does he focus on in the above text?

BUSINESS COMMUNICATION

In the office

Ex.1. Look at the pictures below and say which of them is

a)a meeting room;

b)a director’s office;

c)a receptionist’s (secretary’s) office.

fig.1

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fig.2

fig.3

ans wer ing ma chi ne, cal cul ato r, cal end ar, co mp ute r, cor rect ion pen /flu id, des k tid y, des k

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lam p, fax (m ach ine ), file

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fili ng tra y, fili ng cab inet

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hol e pun ch, ind oor pla nts, key boa rd, las er pri nte r, me mo she ets, mo use mat

,

not epa d, not ice boa rd, pap er clip

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s,

(ph oto )co pie r, pig eon hol es, pos t-it, pri nto ut, rub ber (A m. era ser)

,

sca nne r, sha rpe ner

,

sta ple r, sta ple s, sta ple re mo ver

,

stic k of glu e, (tel e)p hon e, tele pho

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