Invest accept market manage employ

perish avail pay improve value

 

 

Now use suitable words to complete the following sentences.

 

1. Originally, a _______ metal (such as gold, silver or copper) served as a constant store of value.

2. The new government scheme will encourage the flow of _______ into small and growing businesses and revive the local economy.

3. Profit is usually _______ for employers and their families and to those who provided the initial capital.

4. Market price is a price _______ both for sellers and buyers of a specific product.

5. The _______ of the firm decided to pay higher wages to the employees not to lose valuable workers.

 

 

Exercise 7. Fill in the blanks with appropriate prepositions.

1. Every society is faced ___ the problem ___ scarcity.

2. Each factor ___ production has a place ___ our economic system.

3. Economic incentives influence our decisions ___ what and where to buy.

4. People ordinarily buy more ___ а product ___ а low price than they do ___ а high price.

5. Resources ___ a market economy are allocated ___ accordance ___ the laws ___ supply and demand.

6. I went ___ business last year.

7. In a free market economy prices are determined ___ the interaction ___ the forces ___ supply and demand.

8. He told me that there would be change ___ price.

9. Economists are interested ___ measuring the GNP.

10. The supply of oil is adjusted ___ market conditions.

Exercise 8. The Crossword Puzzle.

Read the given definitions and fill in the crossword puzzle.

Across 2. the amount of money that you must pay in order to buy something3. completely necessary; that you must have or do5. settled; lasting, permanent; not varying or subject to alteration6. a person who buys goods or services8. things that are for sale9. a business whose work involves doing something for customers but not producing goods Down 1. the desire or need of customers for goods or services which they want to buy or use2. priorities; what you like more than another4. overproductivity, superabundance, redundancy7. the money that you make when you sell something for more than it cost you

 

Exercise 9. Punctuate the following passage. Provide capital letters, commas, full stops, brackets, colons etc., where applicable.

historically the most recent function of government is that of stabilizing the economy assisting the private economy to achieve the full employment of resources and а stable price level hеrе we will only outline how government tries to do this the level of output depends directly on total or aggregate expenditures a high level of total spending means it will be profitable for industries to produce large outputs this means that both property and human resources will be employed at high levels but aggregate spending may either fall short of or exceed that particular level which will provide for full employment and price stability two possibilities unemployment or inflation may then occur

 

Exercise 10. Read the text below. Choose the best word to fill each gap from A, B, C or D below. There is an example at the beginning. 0).

Supply

Supply is one of the two words economists use most, along with 0) __ B _ __. These are the twin 1)_____ forces of the market economy. Supply is the amount of a good or service 2)_____ at any particular price. The law of supply is that, other things remaining the 3)_____, the quantity supplied will increase as the price increases. The actual amount supplied will be determined, ultimately, by what the 4)____ price is, which depends on the amount demanded as well as what suppliers are willing to 5)____. What suppliers are willing to supply depends on several things:

· the cost of the 6)____ of production;

· technology;

· the price of other goods and services (which, if high enough, might tempt the supplier to 7)____ production to those products); and

· the ability of the supplier accurately to 8)____ demand and plan production to make the most of the opportunity.

 

0 A employment B demand C economy D economics

 

1. A effective B driving C useful D economic

2. A available B sold C present D used

3. A stable B changing C same D similar

4. A fixed B market C selected D ultimate

5. A work out B buy C consume D produce

6. A things B factors C tools D wares

7. A switch B change C exchange D shift

8. A provide B advance C forecast D find

 

 

Exercise 11. Read the text about price. In most of the lines 1 – 12 there is one extra word. It is either grammatically incorrect or does not fit in with the sense of the text. Some lines, however, are correct. Determine the correct and incorrect lines as given in two examples (0) and (00).

 

0 between 00 correct

Price

Price is in equilibrium, what balances between supply and demand. The price charged for something depends on the tastes, income and elasticity of demand of customers. It is depends on the amount of competition in the market. Under perfect competition, all firms are of price takers. Where there is a monopoly, or firms have some of market power, the seller has some control over the price, which will probably be the higher than in a perfectly competitive market. By how much more will depend on to how much market power there is, and on whether the firm(s) with the market power are committed to do profit maximisation. In some of cases, firms may charge less than the profit-maximising price for strategic or in other reasons. Price elasticity is a measure of the responsiveness of demand to a change in price. If demand changes by more than the price has been changed, the good is the price-elastic. If demand changes by less than the price, it is price-inelastic. Economists are also measure the elasticity of demand to changes in the income of consumers.

 

 

Exercise 10. Reading.

Vocabulary

inverse relationship – протилежна (обернено пропорційна) залежність

consistent – послідовний

deter – стримувати

Bargain days – дні розпродажу

income effect – ефект прибутку

substitution effect – ефект заміни

incentive – стимул, спонука

 

Read the text and fill in the gaps with words from the box:

 

consumers reduced decline prices product produce prices purchasing obstacle buy relationship utility allocating

 

Law of Demand

A fundamental characteristic of demandis this: as price falls, the quantity demanded rises. Or as price increases, the corresponding quantity demanded falls. In short, there is а negative or inverse __________(1) between price and quantity demanded. Economists call this inverse relationship the law of demand.

What is the foundation for the law of demand? There are several levels of analysis on which to argue the case.

1 Common sense and simple observation are consistent with the law of demand. People ordinarily do buy more of а product at а low price than they do at а high price. Price is an __________(2) which deters consumers from buying. The higher this obstacle, the less of а product they will buy; the lower the price obstacle, the more they will buy. А high price discourages __________(3) from buying; а low price encourages them to buy. The fact that businesses have "sales" is evidence of their belief in the law of demand. "Bargain days" are based on the law of demand. Businesses reduce their inventories by lowering ________(4), not by raising them.

2 In any given time period each buyer of а product will derive less satisfaction or benefit or _________(5) from each successive unit consumed. Because consumption is subject to diminishing marginal utility — consuming successive units of а particular product yields less and less extra satisfaction — consumers will only buy additional units if price is _________(6).

3 The law of demand also can be explained in terms of income and substitution effects. The income effect indicates that, at а lower price, you can afford more of the good without giving up other goods. А _________(7) in the price of а product will increase the __________(8) power of your money income, enabling you to buy more of the _________(9) than before. А higher price will have the opposite effect.

The substitution effect suggests that, at а lower price, you have the incentive to substitute the cheaper good for similar goods which are now relatively more expensive. Consumers tend to substitute cheap products for dear products.

The income and substitution effects combine to make consumers able and willing to __________(10) more of а product at а low price than at а high price.

 

UNIT 11 Labour and Capital

Text A

Money is not only a means of exchange but is also a means of measuring the value of men's labour. In economic theory, `labour' is any work undertaken in return for a fixed payment. The work undertaken by a mother in caring for her children may be hard work, but it receives no fixed payment. It is not therefore labour in the strict economic sense.

As a scientist, the economist is interested in measuring the services which people render to each other. Although he is aware of the services which people provide for no financial reward, he is not concerned with these services. He is interested essentially in services which are measurable in terms of money payments of a fixed and/or regular nature. In economics, money is the standard by which the value of things is judged. This standard is not a religious or subjective standard, but an objective and scientific one.

Human labour produces both goods and services. The activities of a farmworker and a nurse are very different, but both are measurable in terms of payment received. Labour in this sense is not concerned with distinctions of social class, but simply with the payment of wages in return for work. When we talk about the 'national labour force', however, we are thinking of all those people who are available for work within the nation, i.e. the working population.

It should be noted that any person engaged in private business is not paid a fixed sum for his activities. He is self-employed and his activities are partly those of an employer and partly those of an employee. If however he employs an assistant, to whom he pays a fixed wage, his new employee provides labour in return for payment. He receives his wages, while his employer receives the surplus (large or small) from the whole business. This surplus is the reward of private enterprise and is known as `profit'.

 

 

Exercise 1. Answer these questions, basing your answers on the text.

 

a. What is money, in addition to being a means of exchange?

b. What, in economic theory, is `labour’?

c. Why is a mother's work not ‘labour’?

d. What does the economist measure?

e. What is he not concerned with?

f. What two words are used to describe the money standard?

g. What two words are used to suggest different standards from the money standard?

h. What common factor relates the work of the nurse and the farmworker?

i. What is labour (in the economic sense) not concerned with?

j. What term is used to describe a person engaged in his own private business?

k. What does the employer receive instead of wages?

l. What is the reward of private enterprise called?

 

Exercise 2. Say whether these statements are true or false, and if they are false say why.

 

a. Money is both a means of exchange and a means of measuring labour.

b. A mother's work in caring for her children is not labour because it is seldom very hard work.

c. The economist is interested in the services which people provide for nothing.

d. Services which are measurable in terms of money concern the economist very much.

e. The money standard as used by economists is scientific and strictly objective.

f. Economists say that the activities of farmworkers and nurses are the same.

g. Labour in the economic sense is also concerned with the payment of higher wages to the national labour force.

h. If an employer engages an assistant, his own work can be classified as labour.

 

 

Exercise 3. Combine these sentences by using 'not only... but also'. This combination creates a contrast:

 

EXAMPLE: Money is a means of exchange. Money is a means of measuring men's labour.

Money is not only a means of exchange, but also a means of measuring men's labour.

a. The economic system is the sum-total of our individual economic activities. The economic system is the general situation which influences our individual activities.

b. This scheme is acceptable to both the management and the trade unions. This scheme has government approval.

c. The factory is producing less every year. The factory is losing valuable workers.

d. The government has set up a new economic commission. The government has begun to consider a change in the law very seriously.

e. The situation interests economists considerably. The situation has certain features which make it highly unusual.

 

 

Exercise 4. Punctuate the following passage. Provide capital letters, commas, full stops, brackets, colons etc., where applicable.

 

the total working population of noland in 1990 was about 15 million some 46 per cent of the total population this included about 76 per cent of persons of normal working age 14 to 60 for women 14 to 65 for men about 90 per cent of the men were engaged in productive work while the remaining ten per cent were students private individuals without the need to work or disabled persons the proportion of women in the national labour force was much lower being about 54 per cent many women did not wish to undertake paid employment or were prevented from doing so by household duties the great majority of the working population worked for a wage or salary but 09 million were employers or self employed

 

 

Exercise 5. Make the words negative by using the prefix dis-.

 

EXAMPLE: satisfaction = dis + satisfaction = dissatisfaction

 

NOTE The prefix dis- usually possesses a more specialized meaning of 'oppositeness' or 'opposite action' than the negative prefixes un-; in- and non-. Use your dictionary if necessary.

 

a ability d obey g qualify j comfort

b pleasure e engaged h continue

c agree f connect i possess

 

 

Text B

Labour is any work performed for an employer at a negotiated rate while profit is the surplus which accumulates as a result of productive work. The employer obtains this surplus after he pays the necessary expense of his business and the wages of his employees. He may be required to share the surplus with others who have provided the capital with which he started his business. Most businesses need capital in order to start productive work, and the capital pays for the accommodation, machinery and other items which the business needs. There is always an element of risk in providing capital and starting a business. The business may not be successful. The employees of the business do not bear this risk, but the employers and the providers of capital do bear it. If the business is successful, the risk has been justified and the invested capital earns part of the profits as a return on the investment.

The capital which people provide to help new businesses is an accumulation of previous surpluses on previous business activities. In this way the past is used to finance the future. Such capital is accumulated by a deliberate policy of saving surpluses. This policy may be personal and individual, or it may be public and collective. As such, it is common to both the capitalistic and communistic systems. In both systems, a certain part of the profits is ‘ploughed back' into the system in order to create capital.

In general terms, capital can be defined as (1) a factor of production (for example, machinery or cash); (2) the assets possessed by a person, a company or a nation. Land, houses and shares in a business are capital. In terms of the state, all railways, docks, roads, airports and state funds of money are part of the nation's capital.

 

 

Exercise 1. Answer these questions, basing your answers on the text.

 

b. What is profit?

c. At what point does an employer obtain his surplus?

d. Who may he be required to share it with?

e. What do most businesses need?

f. Why is there always an element of risk in providing capital?

g. Who bears the risk?

h. What justifies the risk?

i. How is the past used to finance the future?

j. What do people 'plough back' into the system?

k. Why is it ploughed back?

l. What examples of private capital are given?

m. What examples of public capital are given?

 

 

Exercise 2. Say whether these statements are true or false, and if they are false say why.

 

a. Labour is work performed by an employer at a negotiated rate.

b. The expenses of a business are part of the surplus.

c. Usually new businesses need capital.

d. Because businesses may not always be successful, there is always some risk involved in financing them.

e. Employers and employees share the risk in financing new enterprises.

f. The surpluses which people provide to help new businesses arise from previous economic activities.

g. Communistic economies also have policies of saving surpluses.

h. A nation's capital in economic terms is the city where the government is situated.

 

 

Exercise 3. Combine these sentences by using who, following either the first or second example.

 

EXAMPLE: (1) He may be required to share the surplus with others. The others have provided the capital. – He may be required to share the surplus with others who have provided the capital.

(2) The manager will begin work next month. The manager was appointed last week. – The manager who was appointed last week will begin work next month.

 

a. He may wish to discuss the scheme with others. The others have been interested in it for some time.

b. The economics expert took six months to present his report. The expert was chosen to investigate the matter.

c. The government appointed a special commission of industrial experts. These experts would meet regularly to plan production targets.

d. Those employees were satisfied with their working conditions. They were engaged on two-year contracts.

e. Those employees were not satisfied with the working conditions. The employees were engaged on a day-to-day basis.

f. The bank decided to provide capital for the farmers. The farmers were interested in increasing their productivity.

g. The official investigator decided that the management was not efficient. The investigator was sent by the government to inspect the factory.

h. The trade unions represent the majority of those workers. The workers earn fixed wages.

i. The owners of the factory needed a manager. The manager would be concerned not only with efficiency in production but also with good relations between employers and employees.

j. The central planning authorities discussed changes in policy. The authorities were concerned with the drop in production.

 

 

Exercise 4. Punctuate the following passage. Provide capital letters, commas, full stops, brackets, colons etc., where applicable.

 

there must always be people willing to bear the risk of new business undertakings in addition to simple risk bearing however it is necessary to have people who will control and co ordinate the various factors of production such people should decide the nature the quantity the quality and the distribution of new products as well as bearing the risk of success or failure economists call the person who undertakes these functions an entrepreneur this term is french and means one who undertakes something

 

 

Exercise 5. Make compound words by altering these sentences.

 

EXAMPLE: He is not interested in bearing the risks.

He is not interested in risk-bearing.

 

a. He is not interested in owning a house.

b. He is interested in making profits.

c. The company has decided on a policy of sharing profits.

d. The business of raising capital is sometimes difficult.

e. The problem of making good policies is part of politics.

 

 

Exercise 6. Find single words in the text B for which these words could be substituted.

 

a done (1-3) d given (4-6) g made worthwhile (10-14)

b grows (1-3) e danger (9) h building-up (12-16)

c gets (2-4) f carry (10-12) i earlier (12-16)

 

Essential Vocabulary

1. fixed payment призначена/встановлена оплата

2. financial reward фінансова винагорода

3. distinction = difference відмінність

4. self-employed той, що обслуговує своє власне підприємство; працюючий не за наймом

5. productive work продуктивна праця

6. disabled person інвалід

7. negotiated rate договірна тарифна ставка

8. expense витрати

9. provide capital надавати/забезпечувати капітал

10. bear the risk нести відповідальність за ризик

11. return on (the) investment рентабельність інвестицій [капіталовкладень]

12. plough back реінвестувати, капіталізувати

13. fixed wage фіксована [тверда] заробітна плата

14. undertaking = project, scheme

15. raise capital збирати кошти, мобілізувати капітал, шукати фінансування