Business and Economy

The economy is the sum of all business transactions, jobs, and goods and services produced, sold and purchased. Economics exist at national, state, regional, and local levels.

Economics is the social science that studies the economy.

Demand is the amount of goods or services consumers are willing and able to buy. Supply is the amount of goods and services businesses are willing and able to provide at a certain price. Price responds to pressures of demand and supply. When demand exceeds supply, a shortage exists. A surplus exists when supply exceeds demand.

There is a circular flow of income within an economy. Consumers use their income to pay for goods and services. Businesses use their income to pay for the factors of production of natural resources, labour, capital and technology. There is also a circular flow of goods and services. Consumers sell their time and skills as labour. Some consumers also own natural resources and or invest in the capital of production.

Businesses use these factors of production to provide the goods and services demanded by consumers.

The interaction of demand and supply determines the prices of consumer goods and services. The market price is the point at which the supply and demand curves intersect. In this case, consumer demand for a product or service equals the willingness and ability of business to provide it. There is neither a shortage nor a surplus.

Competition is important for consumers because it keeps prices at their lowest possible level. Competition also permits consumers to make choices based on the quality, appearance, and utility of consumer goods.

Text 4

I. Remember the following words and word-combinations:

1. economics	економіка
2. foreign exchanges	іноземна валюта
3. consumption	вживання
4. to transact business	укласти угоду
5. taxes	податки
6. commercial transactions	комерційні угоди
7. macroeconomics	макроекономіка
8. microeconomics	мікроекономіка
9. total output	валова продукція
10. income	доход
11. expenditure	витрати
12. interest rates	відсоткова ставка
13. international trade	міжнародна торгівля
14. to influence	впливати
15. individual market	окремий ринок

II. Read and translate the text: