Ex.5. Thought and discussion questions

1. Why do you suppose the “basic economic problems” exist?
2. Do you feel people are too greedy or are there just too few resources?
3. What is the opportunity cost for you to complete the assignment you are now working on?
4. How is the price of a good or service determined in the market?

Ex.6. Case study: Big city trade – choosing less to get more.

When Peat Mawick, Mobile Oil, Trans World Airlines, and Deloite decided to move their headquarters from New York City, they didn’t make their decisions lightly. These companies are moving to decrease commuting time of employees and to get away from the crime, blight, and high rents of the city.

But what are companies giving up to move out of a city like New York City? City officials and real estate people point out that a Manhattan location provides ready access to suppliers, customers, and service. Further, because Manhattan is the heart of one of the world’s largest transportation, financial, and communication hubs, it offers many other benefits as well.

Companies also have to keep in mind that a move of any distance will cause employees to make a major decision. When J.C.Penney moved from New York City to Plano, Texas, employees either had to relocate or find another job. Some employees might not have been eager to relocate because this meant they had to leave family and friends. Others have spouses who might not have wanted to leave their jobs and children who might have had difficulty changing schools. This means that companies such as Penny’s have to hire new employees to staff their ranks when they arrive in the new location.

The cost of relocating employees can be a major expense for both to the company and the employee.

1. What are the advantages (disadvantages) of living in a city such as New York City?
2. What are advantages (disadvantages) of relocating to another location from New York City?
3. What is opportunity cost of staying in New York City? Of relocating?

Learning recommendations:

Class activity: In this unit of the course book students are supposed to get introduced with the new material: read the text, translate into their native language, summarize in English, complete post-reading tasks and grammar exercises, discuss new speech topics, compose monologues and dialogues in the class.

Home task: Students are assigned to find out additional short information about specific topic of the unit, complete grammar exercises, prepare reports given by the teacher.

Literature:

1. Учебно-методический комплекс для студентов 1 курса неязыковых специальностей, М.Ж. Тусупбекова, А.М. Мухтарханова, 2008, Астана, _____стр.

UNIT 11.

MARKETS.

Text: The role of Market.

Grammar: Infinitive and Gerund constructions.

Практические цели: Формирование навыков чтения экономического текста, ознакомление с ролью рынка. Обобщение и закрепление грамматического материала (инфинитив и герундий).

The role of Market.

A market is simply a mechanism, which allows individuals or organizations to trade with each other. Markets bring together buyers and sellers of goods and services. In some cases, such as a local fruit stall, buyers and sellers meet physically. In other cases, such as stock market, business can be transacted over the telephone, almost by remote control.

A market is a shorthand expression for the process by which households decisions about consumption of alternative goods, firms’ decisions about what and how to produce, and workers’ decisions about how much and for whom to work are all reconciled by adjustment of prices.

Prices of goods and of resources, such as labor, machinery and land, adjust to ensure that scarce resources are used to produce those goods and services that society demands.

Much of economics is devoted to the study of how markets and prices enable society to solve the problems of what, how and for whom to produce. Suppose you buy a hamburger for your lunch. What does this have to do with markets and prices? You choose the cafй because it was fast, convenient and cheap. Given your desire to eat, and your limited resources, the low hamburger price told you that this was a good way to satisfy your appetite. You probably prefer steak but that is more expensive.

Now think about the seller’s viewpoint. The cafй owner is in business because, given the price of hamburger meat, the rent and the wages that must be paid, it is still possible to sell hamburgers at a profit. If rents were higher, it might be more profitable to sell hamburgers in a cheaper area or to switch to luxury lunches for rich executives on expense accounts. The student behind the counter is working there because it is a suitable part-time job, which pays a bit of money. Conversely, the job is unskilled and there are plenty of students looking for such work, so owners of cafes do not have to offer very high wages.

Prices are guiding your decision to buy a hamburger, the owner’s decision to sell hamburgers and the student’s decision to take the job. Society is allocating resources – meat, building, and labor – into hamburger production through the price system. If nobody liked hamburgers, the owner could not sell enough at a price that covered the cost of running the cafй and society would devote no resources to hamburger production. People’s desire to eat hamburgers guides resources into hamburger production.

There were several markets involved in your purchase of a hamburger. You and the cafй owner were part of the market for lunches. The student behind the counter was part of the local labor market. The cafй owner was part of the local wholesale meat market and the local market for rented buildings. It is a very general definition of markets, which emphasizes that they are arrangements through, which prices influence the allocation of scarce resources.