Vocabulary Focus. Easily confused words: economic / economics / economy / economical / economist / economize

Easily confused words: economic / economics / economy / economical / economist / economize.

Study the explanations of the words.

Economic means concerned with the organization of the money, industry, and trade of a country, region, or social group. A business that is economic produces a profit.

Something that is economical does not require a lot of money to operate. If someone is economical, they spend money carefully and sensibly. Economical also means using the minimum amount of something that is necessary.

Ex. 1. Complete the following sentences with the appropriate word from the list below.

economic economical

economics economist

economize economy

1. A good manager is _____ in the use of his funds.

2. An _____ person saves money and expense wherever possible.

3. An _____ is a person who studies, teaches, or writes about economics.

4. By exercising strict _____ he saved enough money to retire early.

5. By using _____ in buying food and clothes, we were soon able to save money for the new car we needed.

6. _____ is a social science concerning behavior in the fields of production, consumption, distribution, and exchange.

7. In times of difficulties we all have to _____.

8. It is much more _____ to buy in bulk.

9. Nations experience different rates of _____ growth.

10. The country is in the period of _____ and industrial crisis.

Ex. 2. From two columns choose the words with similar meaning and arrange them in pairs.

A	B
1) scarcity	a) insufficiency / shortage
2) goods	b) merchandise
3) degree of merit	c) manufacture
4) economical	d) quality
5) production	e) work done for somebody or something
6) service	f) infinite
7) unlimited	g) option
8) choice	h) thrifty
9) pervasive	i) all-encompassing

Ex. 3. From two columns choose the words with opposite meaning and arrange them in pairs.

A	B
1) wealth 2) to satisfy 3) scarcity 4) to raise 5) to improve 6) to spend 7) revenue 8) macro	a) abundance b) poverty c) to dissatisfy d) to lower e) to make worse f) to economize g) expenditure h) micro

Ex. 4. Form the following pairs of derivatives and memorize them.

V ®	N	N ®	A
govern   apply   grow	provision   improvement   development	threat   economics nation	wealthy     scientific

Ex. 5. Match English and Russian equivalents.

A	B
1) удовлетворять каждое (любое) желание 2) столкнуться с проблемой редкости (нехватки) 3) перспективный взгляд 4) размещать ресурсы 5) вечная проблема 6) существенный экономический рост 7) улучшать качество 8) быть неудовлетворенным 9) богатый индивидуум 10) способность экономики 11) неудовлетворенные потребности	a) to face the problem of scarcity b) to satisfy every desire c) unsatisfied wants d) conomy’s ability e) an affluent individual f) to be dissatisfied g) to improve the quality h) substantial economic growth i) perpetual problem j) to allocate resources k) perspective overview

Comprehension

Ex. 1. Expand the sentences, using the text.

1. Our world is a finite place where people ….

2. Scarcity is the condition in which….

3. Economics is the study of how ….

4. Macroeconomics is the branch of economics that ….

5. Microeconomics is ….

Ex. 2. Choose the right variant.

1. The condition of scarcity:

a. cannot be eliminated.

b. prevails in poor economies.

c. prevails in rich economies.

d. all of the above.

e. none of the above.

2. The condition of scarcity can be eliminated if:

a. people satisfy needs rather than false wants.

b. sufficient new resources were discovered.

c. output of goods and services were increased.

d. all of the above.

e. none of the above.

3. The subject of economics is primarily the study of:

a. the government decision-making process.

b. how to operate a business successfully.

c. decision-making because of the problem of scarcity.

d. how to make money in the stock market.

4. Which of the following is included in the study of macroeconomics?

a. Salaries of college professors.

b. Computer prices.

c. Unemployment in the nation.

d. Silver prices.

5. Microeconomics approaches the study of economics from the viewpoint of:

a. individual or specific markets.

b. the national economy.

c. government units.

d. economy-wide markets.

Text 2

As you read the text, underline the main ideas and supporting information in reference to opportunity cost.

Opportunity Cost

Do you have things you want? Probably not. Very few people ever reach the stage where they have everything they want. In fact, one want often leads to another. It is important to point out however, that there is a difference between wants and needs. Everyone needs food, clothing and shelter but other so-called “needs” are really “wants”. For example, you may insist that you need a car but you may live in an area where you really don’t have to have one. You can walk, bicycle, or rely on public transportation to get around. Similarly, you may want new clothes, but whether or not you need them is a value judgement. If you think about it, you probably will agree that most people's needs are limited. In contrast, people's wants are unlimited.

Because of the problem of scarcity nations, businesses, and individuals all must make choices in an effort to satisfy unlimited wants with limited resources. These choices are not always easy. Suppose you have saved some money and are thinking of buying a new bicycle. Before buying the bicycle, however, you may give some consideration to the possibility of buying something else instead. Would a stereo system give you more pleasure than the bicycle? What about the possibility of buying a used bike so you will have enough money left over to buy the new shoes you need or to put some money aside for college? Or would it be better to save the money toward a down payment on a used car that you can use on your part-time job as well as at college? Because your income is limited and you can buy only a limited number of things, you probably will give considerable thought to the situation before making your purchase.

However you decide to use your money you will have to give up the opportunity to purchase something else that also may have given you pleasure. If you decide to purchase the second-hand bicycle so that you will have some money to put aside for college, you will have to give up the opportunity to buy the stereo system or to buy the new bicycle. Economists use the term opportunity cost to refer to the next best alternative that is given up when a decision is made to use resources in a particular way. In this example, if your second choice would have been the purchase of a stereo system, then the opportunity cost of buying the used bicycle and putting aside the money for college is the stereo system you could have had.

Money is not the only scarce resource that individuals have. Time is also a scarce resource. Suppose that on a particular Saturday night you have the opportunity to go out on a date with a person you like very much. At the same time, you also have the opportunity to go roller-skating with several of your friends. Because you can't do both you must make a choice. No matter which choice you make, you are going to pay a price in terms of the opportunity cost of your decision. If you decide to go out on the date the opportunity cost of your choice is giving up the opportunity to go roller skating. If you decide to go roller skating, the opportunity cost of that decision is giving up the opportunity to go out on the date.

Nations, too, are constantly faced with the realities of opportunity costs. For example, the government must decide how much it will spend for national defence and how much will be spent on non-defence programs, such as education, transportation, and other public services. Since the government has a limited amount of money, a decision to spend more money on national defence usually will require funding for non-defence programs to be cut. Thus, the opportunity cost of the increased defence spending is the reduction of funding of non-defence programs.

Ex. 1. Choose the best answer to the following questions, using the text.

1. Why is scarcity the most basic of all economic problems?

a. because the federal government must decide how much it will spend for natural defence.

b. it gives you an opportunity to buy something else.

c. because it is the most important issue in balancing unlimited needs with limited resources.

2. What is meant by the term “opportunity cost”?

a. it is your limited income.

b. it is defined as a decision to spend money.

c. it refers to the next best alternative that is given up when a decision is made to use resources in a particular way.

3. How do opportunity costs affect both individuals and nations?

a. a state must spend less money on education.

b. an individual has to give up something that gives him pleasure.

c. an individual or a nation has to sacrifice something for the choice made.

Ex. 2. Say if these statements are true or false.

1. Because of the problem of scarcity nations, businesses, and individuals all must make choices in an effort to satisfy unlimited wants with limited resources.

2. Economists use the term opportunity cost to refer to the next best alternative.

3. Any time you decide to use scarce resource in a particular way, you do not incur an opportunity cost – the cost of the next best alternative use of that resource.

4. Governments never have problems with defence spending.

Text 3

As you read the text, focus on the following terms: 1) economic goods; 2) economic services; 3) factors of production.

Satisfying People’s Wants

Economics is the study of how individuals and society choose to use limited resources in an effort to satisfy people’s unlimited wants. Satisfying such wants involves the production of economic goods and services. We will first define the terms “economic goods” and “economic services”, and then turn our attention to the factors of production needed to produce them.

Economic goods are things of value that you can see, and show to the others. They are things like bicycles, books, stereos, and clothing. Economic goods also include such things as factories, stores, machines, and tools.

Economic services are intangible things that have value but often cannot be seen, touched, or shown to others. Suppose you go bowling on Saturday night. At the bowling alley, you pay for the rental of a pair of bowling shoes and a bowling ball and for the privilege of bowling several games. You enjoy the evening immensely and consider the outing worth the money you spent. However, in terms of tangible purchases, you have nothing to show for your money. This is an example of an economic service. Other examples of economic services are medical care, legal advice, movies and national defence.

Factors of production which are also called productive resources, are the basic resources needed for the production of economic goods and services. Economists, traditionally, have divided the factors of production into three basic categories: (1) natural resources; (2) capital goods; (3) labour. In addition, many economists add a fourth factor of production, entrepreneurship to the list.

Natural resources are things provided by nature. Land, air, water, forests, coal, iron ore, oil, and other minerals are examples of natural resources. They are the starting points of all production, and they represent the most basic limitations of the productive capacity of an economy. In other words, no matter how much skilled labour and technological knowledge an economy has, it cannot create goods if it lacks natural resources.

Capital goods are human-made resources that are used for the production of other goods and services. Factories, machines, tools, railroads, trucks, and business buildings are all examples of capital goods.

It is important to distinguish between capital goods and consumer goods.

Consumer goods which are not a factor of production - are finished products sold to consumers for their own personal use. They include such things as food, clothing, TV sets, and newspapers. In contrast capital goods are things that are used in the production of consumer goods and services. A factory that manufactures TV sets is a capital good. Some things can be either consumer goods or capital goods, depending on how they are used. For example, an automobile purchased for personal use is a consumer good. However, automobiles purchased for use as taxis or for other business purposes are capital goods.

Labour, sometimes called human resources, is any form of human effort exerted in production. It includes all kinds of work. The work of a janitor, teacher, lawyer, engineer, and the governor of your state are all examples of labour. Labour is essential to production, since natural resources and capital goods are of no value unless they can be put to use.

The three facts of production described above - natural resources, capital goods and labour must be combined and organized before production can take place. This is where entrepreneurship, the fourth factor of production, enters the picture. Entrepreneurship may be defined as the function of combining and organizing natural resources, capital goods, and labour, assuming the risks of business failure, and providing the creativity and managerial skills necessary for production to take place. An entrepreneur is a person who carries out these tasks in the hope of making financial gains from the endeavour.

Ex. 1. Find the information in the text to answer the questions:

1. What is the difference between economic goods and economic services? Give examples to illustrate them.

2. What are the basic categories of the factors of production?

3. Are consumer goods considered to be factors of production too? What is the difference between consumer and capital goods?

4. How can you prove that labour is an essential factor of production?

5. Are there any other factors that influence production in modern world?

Ex. 2. Put down words and word combinations from the text you are going to use while giving its short summary.

WRITING

Scan the text and do the following tasks:

A. Choose the headline which best expresses the main idea of each paragraph:

– Economics Theory.

– Descriptive Economics.

– Economic Policy.

B. Reduce the text to one-fifth of its original length giving the most important information in writing.