3. Give the best definition for the following economic terms.

Production costs, fixed cost, depreciation, variable cost, break-even point, interest payments on debts and rents, total cost, marginal cost, revenue, decreasing value of capital goods.

4. Choose the variants that best explain the ideas of the sentences below.

1. Profit is the money that businesses get from selling their products, once the money it costs to make those products has been subtracted.

1. Profit generally is the making of gain in business activity for the benefit of the owners of the business.

2. The positive gain from an investment or business operation after subtracting of all expenses.

3. This is the money gained in business or trade.

2. When a business knows its total costs, it can determine how many goods and services it must produce for its total costs to equal its total revenue.

1. It means the price where the investor has neither a gain nor a loss from the transaction.

2. This implies the point when expenses match income.

c)The point where total costs equal total sales revenue and the company neither makes a profit nor suffers a loss.

5. Give profound answers to the following questions.

1. What is the goal of any business?

2. What is the difference between fixed and variable costs?

3. Why is marginal cost considered to be the most useful measure of cost?

4. How do fixed and variable costs affect the way the business operates?

5. Why is it worthwhile to keep a gas station open 24 hours a day?

6. What is break-even point?

7. Why is labour an important variable cost for most businesses?

8. What happens when marginal cost of producing a product continues to be greater than marginal revenue of a product?

9. At which stage of production is the profit-maximizing quantity of input most likely to be reached?

6. Practise reading §§ 2 and 3. Translate them into Russian. Give a short summary of the passage.

C. How the text is organised

1. What do these words refer to in the text?

1) that (§1); 2) it (§1); 3) they (§2); 4) them (§3); 5) it (§7); 6) its (§7).

2. Find the paragraphs of the text dealing with the following concepts.

1) the measure of marginal revenue; 2) the reasons for business on the Internet; 3) the measures used for calculating the greatest profit; 4) marginal revenue and marginal cost interconnection; 5) the concept of marginal analysis; 6) the objective of any business; 7) the concept of fixed cost; 8) the break-even point of business; 9) interconnection between input and production; 10) the concept of variable costs.

V. Speaking

1. Discussion

Work in pairs or groups. Discuss your answers to the following questions.

1. A farmer has to pay rent for a warehouse in which to store peaches that have just been picked. He has to pay this rent even during the winter, when there are no peaches in the warehouse. Is the rent a fixed cost or a variable cost? Explain.

2. Suppose a business pays its workers a total of $10,000 a year. Last year, the business earned $9,765. Has the business reached the break-even point? Explain.

B. Giving Your Opinion

Comment on the following statement.

E-commerce booksellers have lower fixed costs than bookstores located in shopping centres.