Practical lesson1. Bases of economics.

1. STARTING UP

What do you already know about economics? In pairs or small groups, discuss your ideas and summarize them within 5-7 sentences.

Here are some other quotations about economics. Which of them do you agree or disagree with? Work with the group mates and discuss your ideas.

- “I learned that economics was not an exact science and that the most erudite men would analyse the economic ills of the world and derive a totally different conclusion.” Edith Clara Summerskill (1901-1980), medical practitioner and politician

- “ In economics, hope and faith coexist with great scientific pretension and also a deep desire for respectability. ”

-“ In economics, it is a far, far wiser thing to be right than to be consistent.” “In economics, the majority is always wrong. ” John Kenneth Galbraith (1908-2006), Canadian-American economist

- “ Economics has never been a science — and it is even less now than a few years ago. ” Paul A. Samuelson (1915-2009), American economist

- “ Economics is a subject that does not greatly respect one’s wishes. ” Nikita Khrushchev (1894-1971), First Secretary of the Communist Party of the Soviet Union from 1953 to 1964.

 

KEY VOCABULARY

1) scarce

2) demand

3) entrepreneur

4) supply

5) luxury

6) numerous

7) to possess

8) economic environment

9) failure

10) machinery

11) to assume

12) efficiency

13) prerequisite

14) success

15) intangible

 

Consult a dictionary and write out the transcription and Russian equivalents of these words. Then practice reading them.

2) Use the words from the Key Vocabulary to fill in the gaps in the following sentences:

a) To be a successful _______________ you need to know how to start your own business, get profits, hold negotiations, etc.

b) A simple example of _______________ is when your company is doing well and making profits.

c) Services are called _____________ because you can get them but not touch.

d) Each new _______________ shouldn’t stop you on your way to success, on the contrary — it will give you valuable experience.

e) Every applicant should not only look smart but also _______________ the necessary skills and knowledge.

f) We have a limited amount of resources which means that they are _______________.

g) Can we say that _______________ represents the circumstances in which businesses and individuals interact?

h) There is a strong and obvious connection between _______________ and _______________ for a particular product or service.

i) _______________ goods are not very popular among this social group because they cost too much.

j) There are _______________ examples of start-ups which failed within the first year.

 

Make 3-5 sentences of your own with the words (groups of words) from the Key Vocabulary.

3. READING

Read the following text and write its detailed plan. Compare and discuss your plan with a partner.

 

Economics

Economics is often described as a body of knowledge or study that discusses how a society tries to solve the human problems of unlimited wants and scarceresources. As economics deals with human behaviour, it is classified as a social science. Dealing with human problems, it can’t be an exact science. That’s why we may find different views and descriptions of economics. In this article, we will give an overview of the elements that constitute the study of economics: wants, needs, scarcity, resources, goods and services, economic choice, and the laws of supply and demand.

Every person makes numerous economic decisions every day of his or her life. This occurs when we decide whether to cook a meal at home or go to a restaurant, to purchase some new jewelry or put the money in the bank, to rent a house or purchase it, etc.

Wants, Needs and Scarcity

One of the main problems our society faces is that people have unlimited wants while resources are scarce. A resource is said to be scarce when there is not enough of it to satisfy human wants. At the same time, human wants are endless. Because of unlimited wants and limited resources to satisfy those wants the problem of scarcity appears and demands adequate economic decisions.

Resources

Economic resources, often called factors of production, are divided into four major categories. They are land, labour (human resources), capital, and entrepreneurship. Land does not only mean the ground that might be. It is also includes the resources that come from the land. For example, trees that grow on the land are used to produce paper, furniture and many other products. That’s why trees are also a part of land. Labour (human resources) means the human effort that is used to produce goods and services. It includes physical labour, such as planting and growing trees, building a factory or repairing a vehicle. In addition to physical labour, there is mental labour, which includes such activities as planning the best ways to grow trees and choosing which trees to plant. Capital is input that is often viewed in two ways. Capital might be viewed as human capital — the knowledge, skills, etc. allow people to produce. The other type of capital is physical, which includes buildings, machinery, tools, and other items that are used to produce goods and services. Entrepreneurial abilities (often thought of as the fourth factor of production) are needed to improve what we have, to achieve success in business, and to create new goods and services. An entrepreneur is the one who brings togetherall the resources of land, labour, and capital that are needed to produce a better product or service. Many people associate entrepreneurship with creating or owning a new business. But an entrepreneur may also create a new market for something that already exists or push the use of a natural resource to new limits in order to maximise efficiency and minimise consumption.

Goods and Services

An entrepreneur needs land, labour, and capital to produce goods and services that will ultimately be used to satisfy our wants. Goods are tangible, which means that they can be seen or touched. The production of goods requires the use of limited resources to satisfy wants. Services are provided in numerous ways and are an intangible activity. The service is not something that we can pick up and take home to use. The possible examples of services can be teaching, nursing, haircutting, etc. It is important to understand the idea that goods and services are also scarce because they utilise resources (materials, equipment, and workforce) that are limited. Scarcity results when the demand for a good or service is greater than its supply. Remember that society has unlimited wants but scarce resources. That’s why it is scarcity that causes consumers to make economic choices. If individuals can’t have everything they want, they must decide which of the goods and services are most important and which they can do without.

 

COMPREHENSION CHECK

1) Use the contents of the text and answer the following questions:

a) Why is economics classified as a social science?

b) Which resource can be called scarce?

c) What are the four major categories of resources?

d) What are the two categories of labour?

e) What are the two types of capital?

f) Which goods are called tangible?

g) When does scarcity happen?