Economics: the study of scarcity and choice

Since there is not enough of everything, everyone – individuals, business firms, and government – needs to make choices from among the things they want. In the process they will try to economize, to get the most from what they have. With this in mind, we can define economics as the social science that describes and analyzes how society chooses from among scarce resources to satisfy its wants.

The need to choose is imposed on us all by our income, wealth and ability to borrow. Individuals and families are limited by the size of their personal income, savings and ability to borrow. Similarly, business firms are limited by their profits, savings and borrowing power, and governments by their ability to tax and borrow.

Income, savings, profits and taxes enable people, institutions and government to purchase goods, products you can see or touch, and services, work performed for pay that benefits others. The problem that each must face, however, is that once the decision has been made to choose one set of alternatives, one loses the opportunity to choose the other. Economists describe these kinds of trade-offs as opportunity costs. The opportunity cost of something is its cost measured in terms of what you have to give up to get it.

Business is also faced with the problem of choices and opportunity costs.

NOTES

trade-off — зд. замена

Active vocabulary

opportunity costs ["Ppq'tju:nItI kPsts] n альтернативные

издержки, издержки неиспользованных возможностей

scarce [skeqs] a недостаточный, скудный

income ['INkAm, 'In-] n доход(ы)

profit ['prPfIt] n прибыль, выгода

benefit ['benIfIt] n выгода, денежная прибыль

to borrow ['bPrqV] v занимать, одалживать

to give up отказываться

to tax [t1ks] v облагать налогом; подвергать обложению

(налогом)

to purchase ['pE:tSIs] v покупать, приобретать

to impose [Im'pqVz] v наложить, накладывать

Exercises

1.Translate the words of the same root.

1. Decision, to decide, decidedly.

2. Define, definitely, indefinite, definition, definite.

3. Descriptive, to describe, description, descriptively.

4. Economic, economics, to economize, economist, economical.

5. Performed, performance, to perform.

6. Satisfy, satisfaction, satisfactory, unsatisfied.

7. Tax, taxpayer, to tax.

8. To enable, ability, to be able.

2. Use the suitable words to complete the sentences: enable, income, opportunity costs, economics, imposed.

1. We define … as the social science that analyzes how society makes choices.

2. People are limited by the size of their …

3. Savings and profits … people to purchase goods.

4. … is what you have to give up to get something else.

5. The need to choose is … on us by our income and ability to borrow.

3. Form Participle II from the following verbs.

Impose, analyze, measure, lose, define, economize.

4. Translate the following collocations with Participle II.

The things used in production, the need imposed by our income and ability to borrow, firms faced with the same problem, work performed by the employees, cost measured in terms of.

5. Transform the sentences from the Active Voice into the Passive Voice.

1. Our income imposes on us the need to choose.

2. People want to satisfy their wants.

3. Choosing one thing a person loses the opportunity to choose something

else.

4. One can define economics as a science that deals with scarcity and choice.

5. Economists describe these kinds of trade-offs as opportunity costs.

6. Fill in prepositions if necessary.

1. There is a limit … the resources necessary … produce goods and

services.

2. The government is limited … its ability … tax and borrow.

3. Personal income enables … people … buy all the necessary goods.

4. Every society needs … make choices.

5. Economists describe such trade-off … opportunity costs.

6. … get one thing a person has …give … something else.

7. Answer the questions:

1. What is the problem of scarcity?

2. How can we define economics?

3. In what way are business firms and governments limited?

4. What is the opportunity cost of something?

TEXT C.