Limited resources: the need to choose

We make choices every day. We have to because, as we have seen, not all of our wants can be satisfied. Therefore we have to decide which wants we will satisfy and which we will not.

Should I take a bus to college or use the money to buy some more paper for my Business studies notes? Do I buy a new coat or spend the money on a new radio? All choices involve giving something up.

This problem exists for governments and businesses as well as for individuals. Should the government build another hospital, or a new road into the city? Should the owner of a business purchase a computer or use the resources to pay for a new advertising company? All of these choices involve giving something up too. If the resources of the factors of production were not scarce, there would be no need to choose. We could all have everything we wanted!

In making any choice, we need to consider what we are giving up, to make sure it is not worth more to us than the option we are choosing. This is called considering OPPORTUNITY COST of a decision – the lost opportunity resulting from the choice of something else.

To summarize: human wants are unlimitedbut the resources necessary to satisfy those wants arelimited. Thus, economics deals with the problems which every society is faced with throughout history –the problems of scarcity and choice.

Scarcity is the imbalancebetween our wants and the means to satisfy those wants. The problem of scarcity is faced by rich as well as poor societies. That is why it is fundamental economic problem.

WORD STUDY

Ex. 10. Study the different meanings of the following words and use them to translate the

sentences.

a)means n - 1) средство

2) имущество, средства существования

mean v - 1) иметь ввиду

2) подразумевать

3) означать

1. Economists study how to use scarce means to satisfy our wants.

2. The word “money” means anything which is used as a medium of exchange.

3. Money is a means of exchange and a store of value.

4. What do economists mean by “purchasing power” (покупательнаяспособность)?

5. The modern word “economics” has its origin in the Greek word “oikonomos” meaning a housekeeper.

b) cause n 1. причина

2. основание

3. повод

4. дело

5. судебное дело, процесс.

сausev-являтьсяпричиной

1. That was the cause of all our difficulties.

2. There is no cause for alarm.

3. That’s a lost cause.

4. He did much for the cost of science.

5. What caused the accident?

6. Damage of the goods may be caused by improper packing.

7. The ruin of the empire was caused by the loss of freedom and the growth of despotism

Ex. 11. Match words with their definitions.

_____ economics	a. items of value that can be seen and touched.
_____ factors of production	b. takes business risks in hopes of earning a profit.
_____ needs	c. land, labour, capital and entrepreneurship
_____ services	d. where buyers and sellers are brought together.
_____ opportunity cost	e. goods or services essential for living.
_____ wants	f. items of value that cannot be seen or touched.
_____ market	g. not enough of everything to satisfy everybody’s wants.
_____ scarcity	h. study of how people use scarce resources to meet needs and wants
_____ goods	i. what one must give up to obtain a good or service.
_____ entrepreneur	j. goods or services which people would like to have, but which are not essential for a living.

Ex. 12. Give the English equivalents to the following words and phrases. Recollect the

sentences of the text where they were used.

сталкиваться с проблемой _________________________________

удовлетворять желания ___________________________________

делать выбор ____________________________________________

экономить ______________________________________________

ограничивать выбор ______________________________________

проблема нехватки _______________________________________

ограниченные ресурсы ____________________________________

удвоить доходы __________________________________________

истинная причина ________________________________________

финансовые ресурсы ______________________________________

уровень жизни ___________________________________________

отказываться от чего-либо _________________________________

способность к риску ______________________________________

рекламная кампания ______________________________________

“цена выбора” ___________________________________________

Ex. 13. Fill in the gaps using words and word combinations from the text.

1. Although there are a lot of g_______ on sale you have to l______ your choice to one or two. 2. An example may help to show you why more m______ is not the answer to the problem of being unable to s______ all people’s n______ and w______. 3. Even those c______ with more money are always c________ that the country is not p________ enough of l________ that they want to buy. 4. The real c_______ of the s_________ of goods and services in a country is too few f________ of p________. 5. Human wants are u________ but the r________ necessary to s________ those wants are l________. 6. S________ is the i_________ between our wants and the m________ to satisfy those wants. 7. In the p_______ of making c________ people, g________ will try to e________.

Ex. 14. Make up sentences with the jumbled words.

in / are limited / the factors of production / any country / in supply.

does not produce / and / printing / services / more money / more goods.

for government / exists / as well as / this problem / and / for individuals / businesses.

by / is faced / scarcity / and / every society / the problem / choice / of.

Ex. 15. Work with a partner and decide how you would explain these notions to an

outsider.

goods a bank note needs

a citizen luxury to economize

Ex. 16. Translate the derivatives and use them in the sentences that follow.

1. to apply, applied, application

2. industry, industrial, industrialized

3. scarce, scarcity, scarcely

4. to educate, education, educative

5. consume, consumer, consumption

1. Resources of water are _________________in hot and dry areas.

2. Engineers have found some _________________fields for this new material.

3. Television in any country has some _________________programmes.

4. Such countries as Canada, Australia and most European countries belong to ____________ countries.

5. The________________ of electricity by an average family has increased.

Ex. 17. Group the following words into ten synonymous groups.

choice want currency work desire

community goods option shortage labour

enterprise extravagance cash alternative money

luxury company ground deficit society

land firm scarcity wish population

COMPREHENSION

Ex. 18. Multiple choice. In the space provided, write the letter of the item that best

complete the statement.

____ 1. The main idea of this chapter is that

1. human wants are limited

2. resources are unlimited

3. individuals must make choices as they use their scarce resources.

4. only undeveloped countries face the problem of scarcity.

____ 2. When economists speak of the need to economize, they are taking about

1. saving.

2. getting the most from what you have

3. studying economics

4. spending as little as possible.

____ 3. Scarcityis a condition that

1. exists only in poor countries.

2. only poor individuals experience.

3. all individuals and societies face.

4. rich people never experience.

____ 4. Which of the following would be a goodin the economic sense?

1. a haircut.

2. a pair of scissors.

3. a visit to a doctor.

4. advice from a lawyer.

____ 5. Labour, to the economists, is

1. organizing a business and managing the operation.

2. anything generally accepted in exchange for property, goods or services.

3. the physical and mental effort needed to produce goods and services.

4. owned, with the other factors of production, by the company using it.

Ex. 19 . Complete the following sentences using the information from the text.

1. Everyone goes through life …

2. Neither individual, nor societies …

3. Scarcity is imbalance between …

4. Human wants are unlimited but …

5. Although there are a lot of goods on sale …

6. Printing more money does not …

7. All choices involve …

Ex. 20. Say if these statements are true or false. Correct the false ones.

1. When there are a lot of goods on sale you don’t have to limit your choice to one or two.

2. Both individuals and societies can have all the things they would like to have.

3. The problem of scarcity is faced by only poor societies.

4. Resources necessary to satisfy people’s wants and needs are unlimited.

5. The real economic problem is shortage of money.

6. Labour is the efforts of people needed to make products.

QUESTIONS FOR DISCUSSION

1. Classify each resources listed below as one of the factors of production by placing the letter of the “factor” in the place provided.

A. Land (Natural Resources) B. Labour

C. Capital D. Enterpreneurship / Management

____ a. auto mechanic ____ b. tractor

____ c. corn field ____ d. corporate officer

____ e. computer ____ f. dentist

____ g. school teacher ____ h. salesperson

____ i. machine tools ____ j. copper

____ k. sheep (wool) ____ l. painter’s ladder

____ m. service station owner

2. Economists like to use Robinson Crusoe as their example when they talk about scarcity. Crusoe faced a hostile (враждебный) world when his ship sank. How was he going to overcome scarcity?

GRAMMAR FOCUS

Ex. 21. Put the verbs in brackets into the correct tense form.

1. In many countries economic development ____________________(to lead) to periods of

rapid population growth.

2. We _____________________________(to develop) this product for three years.

3. As soon as we _______________________(to install) the new line, productivity went up.

4. In 2010 the plant ________________________________________(to manufacture) this car

model for ten years.

5. When the company joined the New York stock market, it ______ already ___________ (to be)

on the London market for 5 years.

6. She ____________________ (to work) for “Procter & Gamble” at the moment.

7. She ____________________ (to work) for ABC when the merger (слияние) took place.

8. ___________ you ______________(to choose) the advertising agency yet?

9. The company _____________________(to cover) all losses by the end of the month.

10. They _________________ (to reward) their employees once a year.

Ex. 22. Complete the following sentences with one of the time prepositions below.

over ago on in at since for

1. He’s been off work __________ three months.

2. He ought to have retired a year __________.

3. She’s been with the company ______________ it began.

4. She left the country _________ 14.00 __________Tuesday.

5. We didn’t receive the delivery _____ time.

6. _______the beginning of the year, prospects looked good.

7. There was a downturn _______ the middle of March.

8. _______2007 our prices have been falling.