Unit 2 The Science of Economics

The science of economics is based upon the facts of our everyday lives. Economists study our everyday lives and the general life of our communities in order to understand the whole economic system of which we are part. They try to describe the facts of the economy in which we live, and to explain how it works. The economist's methods should of course be strictly objective and scientific.

We need food, clothes and shelter. We probably would not go to work if we could satisfy these basic needs without working. But even when we have satisfied such basic needs, we may still want other things. Our lives might be more enjoyable if we had such things as radios, books and toys for children. Human beings certainly have a wide and very complex range of wants. The science of economics is concerned with all our material needs: it is concerned with the desire to have a radio as well as the basic necessity of having enough food to eat.

Thus economics is a social science concerned with the production, distribution, exchange, and consumption of goods and services. Economists focus on the way in which individuals, groups, business enterprises, and governments seek to achieve efficiently any economic objective they select.

Standard economics can be divided into two major fields. The first, price theory or microeconomics, explains how the interplay of supply and demand in competitive markets creates a multitude of individual prices, wage rates, profit margins, and rental changes. The second field, macroeconomics, deals with modern explanations of national income and employment.

Exercise 1. Answer the following questions.

1. What is economics?

2. What is it based upon?

3. What do they try to do?

4. What do they try to explain?

5. What should the methods of the economics be like?

6. What three essential things do we need?

7. What would happen if we could get these essentials without working?

8. What might make life more enjoyable?

9. What is economics as a social science concerned with?

10. What do the economists focus on?

11. In what two fields can standard economics be divided in?

12. What is macroeconomics?

13. What is microeconomics?

Exercise 2. Say whether these statements are true or false. Give your reasons.

1. Economics is a scientific study.

2. Economists try to understand only part of the economic system.

3. If we could satisfy our basic needs without working, we should still work.

4. Radios, books and toys are basic commodities.

5. The range of human wants is very complex.

6. Clothes and shelter are non-essential human needs.

7. Economic studies are essentially non-scientific.

8. Economists study the general life of our communities.

9. Economics is a social science.

10. Economics is concerned only with the production and consumption of goods and services.

11. Microeconomics is a major part of macroeconomics.

Exercise 3. Study the example. It shows how a conditional sentence is organized. Do the same with the pairs of sentences which follow.

EXAMPLE: X = We have money

Y = we can buy food

If X,Y = If we have money, we can buy food.

a. X = We have a radio.

Y = We can listen to the programmes.

b. X = We have food, shelter and clothes.

Y = We have the basic necessities of life.

c. X = You want to get new clothes.

Y = You must earn some money.

d. X = The economic system of a country is strong.

Y = The people will be able to satisfy their wants.

e. X = He wants to become an economist.

Y = He must study economics books

Exercise 4. Now turn the sentences of Exercise 3 completely round.

EXAMPLE: Y = We can buy food.

X = We have money

Y, if X = We can buy food, if we have money.

Exercise 5. Punctuate the following passage. Provide capital letters, commas, full stops, brackets, colons etc., where applicable.

most people must work to earn their living they produce goods and services this is called economic activity all economic activities together make up the economic system this system is very complex economists study the economic system and try to describe and explain it they study the work we do and needs we have if you wish to learn about the science of economics you must study both books and people

Exercise 6. You have now used three words ECONOMICS, ECONOMIC and ECONOMIST. There are also in the set of words economical, economically and economy. In a diagram we can show them like this:

econom	y
	ics
	ic	al	ly
	ist

Each word has a different use. Try to put the right word in the blanks in these sentences:

1. Marx and Keynes are two famous _________.

2. Those people are studying the science of ________.

3. We sometimes call a person's work his _________ activity.

4. People should be very ________ with the money they earn.

5. The economic system of a country is usually called the national _______.

6. The people in that town live very _________.

Now make up your own examples with all these words.

Exercise 7. Combine these pairs of sentences and make them conditional. You must decide whether if goes at the beginning of the first sentences or the second.

1. He must study.

He wants to become an economist.

b. People work.

They will earn more money.

c. You will make money.

You work regularly and rapidly.

d. You work together building this house.

You'll finish the whole thing more rapidly.

e. Men study the economic system of a country scientifically.

We call them economists.

Exercise 8. Change these phrases in order to use the possessive apostrophe.

the work of the economist – the economist's work

the work of the economists – the economists' work

1. the work of the farmer

2. the work of the farmers

3. the needs of the scientist

4. the needs of the scientists

5. the life of the man

6. the lives of the men

7. the toy of the child

8. the toys of the children

9. the needs of the cattle-breeder

10. the needs of the cattle-breeders

11. the education of the son of the farmer

12. the education of the sons of the farmer

13. the work of the farmers and fishermen

14. the work of the person

SUPPLEMENT

Supply the missing articles (the, or a, or an) in these sentences. Follow the examples exactly. In each case, the first sentence is always general, while the second is always specific.

EXAMPLE: This is ___ school. ___ school is open.

= This is a school. The school is open.

1. This is ___ car. ___ car is new.

2. He has ___ house. ___ house is old.

3. The child has ___ toy. ___ toy is green and red.

4. This is ___ piece of coal. ___ piece of coal is burning.

5. This is ___ book. ___ book is about economics.

6. He has ___ radio. He listens to ___ radio every day.

7. That is ___ garage. ___garage contains three cars.

8. That is ___ factory. ___ factory produces cars.

9. That man is ___ farmer. ___ farmer used to breed cattle but now breeds pigs.

10. Each country has ___ economic system. ___ economic system is the sum-total of all ___ activities in that country.

Essential Vocabulary

1. shelter притулок

2. be concerned with займатися (чимось)

3. basic need основна/головна потреба

4. basic necessity предмет першої необхідності

5. range of wants коло потреб

6. field сфера діяльності

7. multitude велика кількість

8. interplay взаємодія

9. wage rate ставка (тариф) заробітної плати

10. profit margin розмір прибутку