UNIT 8. Specialities in Engineering Economics

 

Reading

 

1. Read the text to get the gist of it.

 

WHAT IS ECONOMICS

 

One of the things that young people discover as they grow older is that you can't have everything. You are reminded of it every time you go shopping. Although there are a lot of goods on sale you have to limit your selection to one or two. Everyone goes through life having to make choices.

Every business, every government must pick up and choose from among the things they would like to have because they can't have everything. Every year the most important political debates focus on questions about spending taxpayers' money. Neither individuals, nor societies can have all the things they would like to have.

Economic issues have occupied people's minds throughout the ages. Economists notice that there is no restriction to the amount or kinds of things people wish to purchase. But still there is a limit to the resources used to produce goods and services available to satisfy people's wishes and needs. In other words when a nation's resources are completely employed, the only way to increase the production of one thing will be reducing production of something else.

In the process of making choices people, governments will try to economize, to get the most from what they have. Taking this fact into account we can define economics as the social science that reveals and analyses how society chooses from among scarce resources to satisfy its needs. In other words economics is the science that deals with production, distribution and consumption of commodities, while economy is a careful or thrifty use or management of resources, such as income, materials or labour.

Why should we study economics? There are several very good reasons, all of which involve us. Some of them have to do with us as individuals, some with us as earners or as spenders, some with us as citizens and finally as future economists. As members of the society we live in, there is no escaping economics. The food we eat, the dwelling we live in, the clothes we wear and the way we spend our leisure time are all affected by economic forces. Economic forces also influence decisions in the world of business. In fact one common definition of economics is "the study of how people make living". The more you get informed of the subject, the better career decisions you'll be able to make.

Economics will also be helpful in performing your responsibilities as a citizen in a democracy. As a voter you'll be asked to express your opinion on many subjects involving economic issues. The study of economics will help us to deal with such subjects intelligently.

We have seen that economics deals with the problems of scarcity and choice faced by societies and nations throughout history, but the development of modern economics began in the 17th century. Since that time economists have developed methods for studying and explaining how individuals, businesses and nations use their available economic resources. Large corporations use economists to study the ways they manage businesses and to suggest methods for making more efficient use of their employees, equipment, factories and other resources. Governments also employ economists to study economic problems as well as way to solve them.

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. Microeconomics assumes that people behave rationally. Consumers try to spend their income in ways that give them as much pleasure as possible. As economists say, they maximize utility. For their part, entrepreneurs seek as much profit as they can extract from their operations.

The second field, macroeconomics, deals with is modern explanations of national income and employment. Macroeconomics dates from the book, The General Theory of Employment, Interest, and Money (1935), by the British economist John Maynard Keynes. His explanation of prosperity and depression centers on the total or aggregate demand for goods and services by consumers, business investors, and governments. Because, according to Keynes, inadequate aggregate demand increases unemployment, the indicated cure is either more investment by businesses or more spending and consequently larger budget deficits by government.

 

2. Agree or disagree with the following statements:

 

1) Nowadays all young people know they can have everything.

2) Every year politicians argue on how to spend their taxpayers money.

3) Economics is a political science as it reveals and analyses the government policy.

4) One of the common definitions of economics is “the study now people make money”.

5) We have seen that economics deals with the problems of scarcity and choice.

3. Read the text and answer the questions:

 

1) What do people discover when they grow older?

2) What definitions can we give to the term “economics”?

3) Why should we study economics?

4) Where can we apply our knowledge of economics?

5) What major fields can be standard economics divided into?

6) What is macroeconomics?

 

4. Match the words with the definitions below.

 

Purchase, scarce, commodity, income, manage, employ, demand

1) An article or raw material that can be bought and sold

2) Buy, obtain or achieve at some cost.

3) The desire of consumers for a commodity.

4) Hard to find, rare.

5) The money or other assets received periodically or in a year.

6) Use the services of a person in return for payment.

7) Regulate, be in charge of business.

 

Speaking

 

1. Speak on:

 

1) The definition of economics.

2) The reasons to study economics.

3) The role of economics in the development of modern societies.

4) The importance of microeconomics and macroeconomics.

 

Pre-reading task

Marketing brainteasers

 

1. Which terms are defined below?

 

Take the first letter of each to find the missing word. (This may then help you remember the terms in future)

1) The business function that keeps an organization focused upon its customers wants and needs.

2) The specific goals or targets a firm sets itself.

3) The medium-long term plan for meeting those goals.

4) Short-term actions in response to specific opportunities or threats.

 

Reading

1. Read the text and discuss the questions.

 

1) What is a brand?

2) What is important in firm’s marketing strategy?

3) What approaches are used by firms to develop branding?

4) How is brand created?

A BRAND

 

A brand is the name given by a business to one or more of its products. Branding gives products an identity that distinguishes them from similar products by rival firms. It helps to generate brand loyalty, encouraging customers to regularly purchase particular products. The demand for a product with strong brand loyalty tends to become less price sensitive, meaning that price can be increased without losing much demand. Selecting a brand name is therefore a very important part of a firm’s marketing strategy.

Organizations can use a number of different approaches to branding:

Individual or multiple branding, where businesses use a range of brand names for a variety of products. For example, Procter & Gamble relies on this branding policy for its range of fragrances, including Hugo Boss, Old Spice and Giorgio Beverley Hills. Such branding allows the firm to develop brands for particular market segments.

Corporate or overall family branding, where all the firm’s products are branded with the same name. Virgin, Kraft, Heinz, Microsoft and Ford employ this approach. This type of branding means that the promotion of one item will promote other products within the family. It can increase consumer confidence in the entire range, so increasing sales and profits.

-A mixture of corporate and individual branding, where products are given individual brand names but the corporate brand name is also prominent, e.g. Nestle and Walls.

How is a brand created?

A brand name should be snappy, to remember, unique and convey appropriate images or values. In addition, popular brands are often supported by advertising catch phrases, such as ‘A Mars a day helps you work, rest and play’.

Most organizations employ specialist identity and naming consultants to handle this creative process. Brand Guardians is one such company, and has named (among others) Baars’ Maidwell margarine and Pillsbury Toaster Pockets. According to its director of intellectual property, the name is the first and greatest expression of the brand.

 

2. Find key words phrases and the topic sentences to express the general meaning of each paragraph.

3. Using the information obtained from the paragraphs make an outline of the text.

 

Speaking

 

Speak about the importance of brand in a firm’s marketing strategy.

 

 

Reading

1. Read the text for general comprehension.