Unit 4. What is economics?

1. Read and translate the text.

The word "Economics comes from Greek "oikonomos", which is a combination of two other Greek words "oikos" ("household") and "nemein" ("to manage resources"). So, the Greek origin of the word points to the word points to the study of economics as the management of the limited resources of a household.

As it is known, human wants are unlimited, but the resources necessary to satisfy those wants are limited. Thus, every society is faced with the problem of scarcity and all people have to economize and to make choices from among the things they want.

We can define economics as the social science that describes and analyzes choices from among scare resources to satisfy our wants. The need to choose is imposed on us by our income, wealth and ability to borrow.

There are two sides to the study of economics - macroeconomics and microeconomics.

Macroeconomics is the study of the economy as a whole.

Microeconomics is the study of individual consumers and the business firm.

The resources that go into the creation of goods and services are called the factors of production. The factors of production include natural resources, human resources, capital and entrepreneurship.

Each f actor of production has a place in economic system, and each has a particular function. Economists use the term "the land" when they speak of natural resources as a factor of production. The price paid for the use of land is called rent. Physical and mental effort that people put into the creation of goods and services are called labour or human resources. The price paid for the use of labour is called wages. Wages represent income to workers, who own their labour.

Capital is something created by people to produce other goods and services. Factories, tools and machines are capital resources. The term capital is often used by business people to refer to money. Payments for the use of someone else's money, or capital is called interest.

Entrepreneurship is the managerial and organizational skills used by most firms to produce goods and services.

Profit js what remains after the owners of land, labour and capital have received their payments.

The fundamental economic questions are:

• What goods and services are to be produced?

• How are they to be produced?

• Who will receive them?

The way in which a society goes about answering these questions is known as its economic system.

Active Vocabulary

2. Compose 7 sentences with the words from the text:

to come from - походити

household - домашнє господарство

to manage resources - керувати ресурсами

management - управління, менеджмент

limited - обмежений

human wants are unlimited - безмежні людські бажання

to be faced (with) - стикатися з

problem of scarcity - проблема нестачі, дефіциту

to describe - описувати

to be imposed (on) - бути покладеним (на)

income - прибуток

wealth - багатство

ability to borrow - здатність позичати

macroeconomics - макроекономіка

microeconomics ~ мікроекономіка

creation of goods and services - створення товарів та послуг

factors of production - чинники (фактори) виробництва

natural and human resources - природні та людські ресурси

capital and entrepreneurship - капітал та підприємництво

price - ціна

rent - орендна плата, рента

wages ~ заробітна плата

tools and machines are capital resources - знаряддя і машини ~ це капітальні

ресурси to refer (to) - відноситися, посилатися (на)

interest" процент, відсоток

compound interest - складний відсоток

managerial and organizational skills - керівниці та організаційні вміння і навички