Unit 1. The meaning of economics

Reading

When an artist looks at the world, he sees colour;

When a musician looks at the world, he hears music.

When an economist looks at the world,

He hears a symphony of costs and benefits.

D.Colander

1. Discuss the following questions:

• What is economics?

• Could you explain the difference between these two words: economy, economics?

• What do we mean by goods and services?

• What is the central economic problem?

2. Match the words and their definitions:

1. Economic	a) the study of the production of wealth and the consumption of goods and services in a society, and the organization of its money, industry and trade
2. Economical	b) a system according to which the money, industry and trade of a country or region are organized
3. Economy	c) concerned with economics and organization of the money, industry and trade of a country, region or social group; relating to services, business that produce a profit
4. Economist	d) something that is economical does not require a lot of money to operate; using minimum amount of time, effort, language that is necessary
5. Economics	e) an expert or a student of economics
6. Economic policy	f) save money by spending it carefully and not buying expensive things
7. Economise	g) an action taken, usually by the government, to influence economic events

3. Fill in the gaps with the words:

• economy/economies

• economical

• economic

1. New England’s __________________ is still largely based on manufacturing.

2. ____________________ are competing against each other.

3. These businesses contribute hundreds of millions of pounds to the ___________________of the country.

4. I switched off the lights as an ____________________ measure.

5. She thought of herself as an _______________________ wife.

6. __________________ is the oldest of social sciences.

7. You’ll have to travel ______________________ class.

8. This system was extremely ______________________ because it ran on half-price electricity.

4. Give Russian equivalents to the following words and expressions:

• human behavior

• individual behavior

• a unique method for analyzing and predicting

• the effects of institutions

• assumption

• well being

• an equilibrium

• fundamental condition changes

• an info gathering mechanism

5. Read the text.

Economics is a social science that studies human behavior. Economics has a unique method for analyzing and predicting individual behavior as well as the effects of institutions such as firms and governments, or clubs and religions.

Economics begins with the assumption that everyone’s behavior is primarily motivated by self interest and constrained by the limited amount of resources under their control. Agents who choose the least cost path to increasing their well being are behaving efficiently. Therefore, economic models use constrained optimization of well being. The interactions of individuals in markets, each trying to balance their own costs and benefits, leads to an equilibrium prices and quantities that remain stable until some fundamental condition changes. The presence of an equilibrium in each market gives individuals an info gathering mechanism through which they learn of and can react to the effect of their diction their own well being.

Economics has a unified method of analysis. The decision-making process is broken down into discrete steps and the impact of each step is analyzed. The focus is on the effect of incremental changes in relevant variables. This analytical method yields estimates of the marginal effects of alternative decisions.

Most simply put, economics is the study of making choices.

Economics examines how we make choices:

• a new car or college tuition?

• more hospitals or more highways?

• more free time or more income from work?

It gives us a way of understanding how to make best use of natural resources, machinery, and people's work efforts.

Economics helps us examine trade-offs between various goals and anticipate the outcomes of changes in governmental policies, company practices, or composition of the population, and so on. Almost all issues of public and private policy involve economics and so do your own individual choices.

6. Complete the sentences, according to the text:

1. Economics has a unique method for ………………………

2. Economics begins with the assumption that ………………….

3. Agents who choose the least cost path to increasing their well being are……………………….

4. The interactions of individuals in markets, each trying to balance their own costs and benefits, leads to ………………………………

5. The presence of an equilibrium in each market gives individuals an info gathering mechanism through which …………………………

6. The decision-making process is broken down into…………………

7. Most simply put, economics is the study of ……………….

7. Read the text one more time and think of the title.

8. Unite all the sentences of exersice 6, using the following words and expressions: