Economics: the study of scarcity and choice

VOCABULARY

 

to satisfy wants and needs - удовлетворять желания и потребности poverty– бедность shortage– нехватка, дефицит luxury- предмет роскоши to solve the problem – решать проблему standard of living – уровень жизни to increase – повышать goods and services – товары и услуги cause– причина to provide – обеспечивать, предоставлять

machinery – машинное оборудование tools – инструменты manufacture - производство skill– умение risk-taking ability – способность к риску entrepreneur– предприниматель scarcity- нехватка, дефицит advertising company – рекламная кампания opportunity cost –альтернативные издержки, упущенная выгода imbalance – несоответствие

Everyone goes through life having to make choices. One of the things that young people discover as they grow older is that you can’t have everything. Although there are a lot of goods on sale you have to limit your choice to one or two. Neither individuals, nor societies can have all the things they would like to have.

Most people in the world cannot afford to buy everything they want because our wants are unlimited. Why are there so many wants and needs that we cannot satisfy? Why do millions of people live in poverty in many countries around the world? Most people will answer these questions by saying, “Because there is not enough money”.

Is this the real ECONOMIC PROBLEM – shortage of money? An example may help to show you why more money is not the answer to the problems of being unable to satisfy all people’s wants and needs.

The government of a small country is worried about the large numbers of people who cannot afford enough of the basic needs of life. Even those citizens with more money are always complaining that the country is not producing enough of the luxuries that they want to buy. The government decides to print more bank notes and to double all of the incomes of everybody in the country.

Has the government solved the economic problem of the country? Are there now more goods for the people to buy? Are there more houses for them to live in? Will the standard of living of the population increase?

The answer to all these questions is “No”. Printing more money does not produce more goods and services or satisfy more wants or needs, because prices will rise. What is the point of having more money to spend, if the prices of everything you want to buy have gone up by the same amount?

 

The real cause of the economic problem

The real cause of the shortage of goods and services in a country is not having too little money. It is too few FACTORS OF PRODUCTION (also called resources of production). There are four factors of production.

Land This term is used to cover all the natural resources provided by nature and includes fields and forests, oil, gas, metals and other mineral resources.

Labour This is the physical and mental efforts of people needed to make products.

Capital This is the finance, factories, machinery and tools needed for the manufacture of goods.

Enterprise This is the skill and risk-taking ability of the person who brings the other resources together to produce a good or service. For example, the owner of a business. These people are called entrepreneurs.

In any one country, and in the world as a whole, these factors of production are limited in supply. As there is never enough land, labour, capital or enterprise to produce all of the needs and satisfy unlimited wants of a whole population, there is an economic problem of scarcity.

 

 

Text 3

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 unlimited but the resources necessary to satisfy those wants are limited. Thus, economics deals with the problems which every society is faced with throughout history – the problems of scarcity and choice.

Scarcity is the imbalance between 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” (покупательная способность)?

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.

 

сause v - являться причиной

 

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.

 

 

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

 

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

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

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

4. 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

 

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

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

C. Television in any country has some _________________programmes.

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

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

 

 

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

 

choice want currency work desire

community household 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

a. human wants are limited

b. resources are unlimited

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

d. only undeveloped countries face the problem of scarcity.

 

____ 2. The problem which every society is faced with throughout history is the problem of

a. production and distribution

b. unemployment

c. scarcity and choice

d. taxation

 

____ 3. Scarcity is a condition that

a. exists only in poor countries.

b. only poor individuals experience.

c. all individuals and societies face.

d. rich people never experience.

 

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

a. a haircut.

b. a pair of scissors.

c. a visit to a doctor.

d. advice from a lawyer.

 

____ 5. Labour, to the economists, is

a. organizing a business and managing the operation.

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

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

d. 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