XIII. Communicative situation

ББК 81.2 Англ— 923

ISBN 966-642-072-4 © в. К. Шпак, О. О. Мустафа,

Т. І. Бондар, 3. Ф. Кириченко, T. А. Сапожникова, Л. О. Шевцова, 2001

ПЕРЕДМОВА

Існуючі до цього часу типові програми з іноземних мов для немовних вищих навчальних закладів та підручники й посібники для студентів економічних спеціальностей мають за мету лише розвиток навичок читання і перекладу фахової літератури іноземною мовою за допомогою словника. Слід зазначити, що багато з цих видань морально застаріли і не відповідають вимогам до зрослого рівня економічних знань.

Сучасний стан розвитку зовнішньоекономічних зв'язків потребує якісно нового підходу не тільки до проблем вив­чення економіки взагалі, а й до мовної підготовки майбут­нього економіста, якого вже не можна уявити без належ­ного володіння іноземною мовою. Саме цей підхід зумо­вив структуру цього підручника, укладеного за принципа­ми: від простого — до складного; від відомого — до невідомого (теоретичні знання, засвоєні студентами на за­няттях з економічних теорій, бухгалтерського обліку тощо, закріплюються та поповнюються на заняттях з англійської мови за цим підручником); орієнтація на найновітніші до­сягнення світової економіки (підручник містить тексти з різних зарубіжних джерел, що стосуються проблем економічних теорій, прикладної економіки, західноєвропейської та аме­риканської мікро- і макроекономіки).

Широким є тематичний діапазон уроків. Вони охоплю­ють велике коло проблем розвитку науки, важливих для нинішнього стану народного господарства України.

Підручник розрахований на студентів І—III курсів еко­номічних спеціальностей вищих навчальних закладів.

Мета його — розвиток навичок усного мовлення та ро­бота з фаховою літературою. Цій меті підпорядковано струк­туру завдань кожного уроку: прочитати та вивчити нові слова і словосполучення; дібрати англійські еквіваленти до поданих слів і виразів; виконати вправи на підстановку про­пущених слів у реченнях; прочитати та перекласти тематич­ний текст; відповісти на запитання; дати визначення словам; перекласти речення англійською мовою; інсценізувати те­матичні діалоги, створити діалоги на базі нової лексики,

закріпленої в попередніх вправах; створити тематичні си­туації, максимально наближені до практичних (вихід засвоє­ного лексичного матеріалу в реальну фахову розмову), тощо.

Тексти служать не тільки для розвитку навичок читання та перекладу фахової літератури, а й несуть у собі нову важливу інформацію, необхідну для сучасного економіста. Кожен урок побудовано за принципом усного виперед­ження. Перш ніж розпочати роботу над текстом, потрібно виконати усні та письмові тренувальні вправи на закріплен­ня лексики і на розвиток навичок усного мовлення. Після цього текст буде логічним продовженням теми, що дасть змогу студентам використати матеріали в подальшій усній розмовній практиці.

закріпленої в попередніх вправах; створити тематичні си­туації, максимально наближені до практичних (вихід засвоє­ного лексичного матеріалу в реальну фахову розмову), тощо.

Тексти служать не тільки для розвитку навичок читання та перекладу фахової літератури, а й несуть у собі нову важливу інформацію, необхідну для сучасного економіста. Кожен урок побудовано за принципом усного виперед­ження. Перш ніж розпочати роботу над текстом, потрібно виконати усні та письмові тренувальні вправи на закріплен­ня лексики і на розвиток навичок усного мовлення. Після цього текст буде логічним продовженням теми, що дасть змогу студентам використати матеріали в подальшій усній розмовній практиці.

У кінці підручника подано словник термінів і словоспо­лучень з економічних спеціальностей, що вживаються в текстах уроків.

Підручником можуть з успіхом користуватися як сту­денти, аспіранти економічних спеціальностей вищих закладів освіти, так і всі, хто працює у сфері економіки, бізнесу, менеджменту зовнішньоекономічної діяльності підприємств.

У підручнику використано адаптовані текстові матеріали таких зарубіжних видань:

The Macro Economy Today/Ed. by Bradley R.Schiller. — N.Y.:Mc. Graw — Hill, Inc., 1991.

Applied Economics. A Programm of Junior Achieve­ments. — Colorado: Junior Achievement Inc.,1990.

Contemporary Economics/Ed. by James R.Kearl. — Clenvien;

Clenvien; Illinois; Boson; London: Scott, Forestman and Co., 1989.

Lesson 1

WHAT IS ECONOMICS?

I.Read and memorize the following words, word- combinations and word-groups:

scarcity — недостатня кількість, брак чогось e.g. Every society is faced with identical problem, the problem of scarcity.

to make choice — зробити вибір

e.g. Everyone goes through life having to make choices, resources — ресурси

to satisfy one's wants — задовольняти чиїсь потреби e.g. Human wants are unlimited, but the resources necessary to satisfy those wants are limited.

individual consumer — окремий споживач e.g. Microeconomics is the study of individual consumers and the business firms.

to be faced with the problem — стикатися з проблемою opportunity costs — можливі витрати e.g. Business is faced with the problem of choices and opportunity costs.

private ownership — приватна власність profit — прибуток

e.g. Private ownership gives people the incentive to use their property to produce things that will sell and earn them a profit.

II. Give English equivalents of the following:

приватна власність

прибуток можливі

витрати недостатня

кількість окремий

споживач досягти мети

зробити вибір задовольняти

чиїсь потреби ресурси

витрачати гроші стикатися з

проблемою виробляти

товари

III. Fill in the blanks with appropriate words:

1. Everyone goes through life having to make .... scarcity

2. The price paid for the use of land is called .... wages

3. The price paid for the use of labor is called .... interest

4. Traditional economic ... are usually found in the more remote areas rent

of the world. choices

5. Payment for the use of someone else's money, or capital, systems

is called .... resources

6. ... exists because human wants are virtually unlimited, whereas the

necessaries to satisfy those wants are limited.

7. The ... or factors of production as they are called, are land, labor,

capital and entrepreneurship.

IV. Read and translate the text:

Human wants are unlimited, but the resources necessary to satisfy those wants are limited. Thus, every society is faced with the identical problem, the problem of scarcity. Since there is not enough of everything to go around, everyone — individuals, business firms, and government — needs to make choices from among the things they want. In the process they will try to economize, to get the most from what they have. With this in mind we can define economics as the social science that describes and analyzes choices from among scarce resources to satisfy its wants. The need to choose is imposed on us by our income, wealth and ability to borrow.

The food you eat, the home you live in, the clothes you wear, and the way you spend your leisure time are all affected, in part, by economic forces. The study of economics will help you to live a fuller life. Economic forces also affect decisions in
the world of business. The more you know about the subject, the better carreer decisions you will be able to make.

The development of modern economics began in the 17th century. Since that time economists have developed methods for studying and explaining how individuals, business and nations use their available economic resources. Large corporations use economists to study the way they do business and to suggest methods for making more efficient use of their employees, equipment, factories, and other resources. Economists have two ways of looking at economics and the economy. One is macro approach, and the other is the
micro. Macroeconomics is the study of the economy as a whole. Microeconomics is the study of individual consumers and the business firm.

entrepreneurship. Each factor of production has a place in our economic system, and each has a particular function. Our country is rich in natural resources. Economists also use the term «land» when they speak of natural resources as a factor of production.

The price paid for the use of land is called rent. Rent becomes income to the owner of the land. Economists call the physical and mental effort that people put into the creation of goods and services labor or human resources.

The price paid for the use of labor is called wages. Wages represent income to workers, who own their labor.

Capital is something created by people to produce other goods and services J A factory, tools and machines are capital resources. The term capital is often used by business people to refer to money they can use to buy factories, machinery and other similar productive resources.

Payment for the use of someone else's money, or capital is called interest.

Closely associated with labor is the concept of entre­preneurship, the managerial or organizational skills used by most firms to produce goods and services. The reward to entrepreneurs for the risks, innovative ideas and efforts that they have put into the business are profits, whatever remains after the owners of land, labor and capital have received their payments.

In exercising the choices imposed upon individuals, business firms and governments by their unlimited wants and limited resources, every society must come to grips with the fundamental economic questions:

— What goods and services are to be produced?

— How are they to be produced?

— Who will receive them?

The way in which a society goes about answering these fundamental questions is known as its economic system. Economic systems may be classified as traditional, command or market systems. As the names suggest, resources are allocated (distributed) in a traditional economy in accordance with tradition and in a command economy by government planners. Resources in a market economy are allocated in accordance with the laws of supply and demand (pp.1 —10).*

* В уроках 1-17 подано посилання на видання: Applied Economics. A Programm of Junior Achievements. — Colorado: Junior Achievement Inc., 1990.

IV. Answer the following questions:

1. Why must all societies deal with scarcity?

2. What is rent?

3. How can we define the term «economics»?

4. What is wages?

5. Why is the need to choose imposed on us?

6. What is interest?

7. What is microeconomics?

8. What is macroeconomics?

9. When did the development of modern economics begin?

10. What questions must every society provide answers to?

11. How do you understand the term «factors of production»?

VI. Define the terms:

economics capital

interest microeconomics

macroeconomics wages

profit labor and human resources

V. Translate into English:

1. Бажання людини безмежні, а кошти, необхідні для здійснення цих бажань, надто обмежені. 2. Перед кожним суспільством постає проблема нестатку. 3. Економічні чин­ники впливають на рішення у світі бізнесу. 4. Ресурси, не­обхідні для утворення товарів і послуг, називають чинника­ми виробництва. 5. Заробітна плата — це та винагорода, яку отримують робітники за свою працю. 6. Купуючи фаб­рики, машини та інші засоби виробництва, ділові люди часто вживають термін «капітал». 7. Економіка — це наука, яка описує та аналізує вибір з-поміж недостатніх ресурсів, які мають задовольнити потреби населення. 8. Кожний чинник виробництва має місце в нашій економічній системі і кож­ний виконує відповідну функцію.

VI. Read and dramatize the following dialogue:

P.: Hello, Bob!

B.: Oh, Peter, glad to see you. Haven't seen you for a long time. What have you been busy with, and what are you doing now?

P.: I'm a student of the Kyiv University. And what about you?

B.: You know, when I received my school leaving certificate, I decided to work at a plant and get a speciality.

P.: What speciality have you got?

B.: I'm a fitter now, I get good wages and I can support my mother. And now that I have become a skilled worker

I think already I can combine my job with studies by taking correspondence courses or attending the evening faculty of an institute.

P.: What institute do you want to enter?

B.: I have thought about the Cherkassy Engineering and Technological Institute, but I haven't yet decided. I'd like to become an economist.

P.: Is it really interesting for you?

B.: Oh, yes, of course. I know that the studying of economics will help us to understand the economic forces better and enable us to live a fuller life.

P.: Do you know what is the basic economic problem?

B.: I think I do. The central problem of economics is to de­termine the most efficient ways to allocate the factors of scarcity created by society's unlimited wants and limited resources.

P.: But in doing so, every society must provide answers to the following three questions:

— What goods and services are to be produced and in what qualities are they to be produced?

— How are those goods and services to be produced?

— Who will receive and consume (get to use) those goods and services?

B.: You are right. The way in which a society goes about answering these fundamental questions is known as its economic system. I'd like to study the economic system of our country.

P.: Now I understand you and I hope you will enter the

institute and become a very good economist.

B.: Well, I am a bit hungry, why don't we have a snack together?

P.: Good idea. Let's go and have a snack in the cafe.

IX. Make up your own dialogue using the following expressions and word-combinations:

a limit to the resources the problem of scarcity

to make choices to purchase goods and services

to pay opportunity costs economic forces

factors of production the basic economic problem

X. Inform the group about your activities and find out if he or she does the same:

Model: I decide to become an economist. And what about him? (too) He decides to

become an economist too.

1. I pay for the use of land. And what about her? (regularly) 2. I negotiate a sale. And what about her? (too) 3. I want to know more about the subject. And what about him? (too) 4. I need to make choices from among the things I want. And what about her? (from time to time) 5. I expect you to use your property to produce things that will sell and earn you a profit. And what about him? (too)

XI. Express doubt concerning the truth of the following statements:

Model: He understands your question.

I'm afraid he doesn't understand your question.

1. You know his decision. 2. Everyone goes through life having to make choices.

3. Economic forces affect decisions in the world of business. 4. Large corporations use economists to study the way they do business and to suggest methods for making more efficient use of their equipment, factories, and other resources. 5. Each factor of production has a place in our economic system. 6. The study of economics helped me to understand the economic forces better.

XII. Ask about the following as in the model:

Model: Ask your friend if he knows what is the basic economic problem. Do you know what is the ba­sic economic problem?

1. Ask your friend if John knows the answers to the fundamental economic questions.

2. Ask your friend if rent becomes income to the owner of the land. 3. Ask your friend if he wants to study economics. 4. Ask your friend if economic forces affect decisions in the world of business. 5. Ask your friend if the resources go into the creation of goods and services.

XIII. Translate into English:

1. Приватна власність дає людям стимул використовувати свою власність для отримання прибутку. 2. Економіка — це наука, яка вивчає специфіку розвитку економічних відносин в окремих сферах народного господарства. 3. Відношення власності на засоби виробництва утворюють основу еконо­міки. 4. Мені цікаво знати, чи впливають економічні чинники на рішення у світі бізнесу. 5. Вивчення економіки дає мені можливість краще орієнтуватися в бізнесі. 6. Заробітна пла­та — це грошова винагорода за використану працю.

XIV. Communicative situations:

1. Assume that you have just received your first paycheck of $135. Describe how the concepts of scarcity, opportunity costs, and the need to make choices will affect the way in which you spend your money.

2. If all people could have anything they wanted simply by rubbing a magic lantern, there would be no need to study economics. Explain this statement.

3. Suppose the United States Government decided to send every man, woman and child living in Ukraine a package containing 10,000 crisp new $10 bills. What effect would this have on us all?

Lesson 2

THE AMERICAN ECONOMIC SYSTEM

I. Read and memorize following words, word-combinations and word-groups:

a pillar — опора, стовп

e.g. There are three «pillars» of economic system: private property, the price system and competition.

to use one's assets — використовувати (чиє-небудь) майно e.g. According to the right to private property the owners of natural resources and capital can use their assets as efficiently as they can.

economic incentives — економічні стимули e.g. Economic incentives influence our decisions about what and where to buy.

to switch one's deposits from one bank to another — переводити депозити з одного банку в інший

to receive higher interest rates — одержувати вищі відсотки за вкладом

e.g. Savers will switch their deposits from one bank to another to receive higher interest rates, profit motive — мотив прибутку

e.g. The profit motive is the force that drives our economic system.

entrepreneur — підприємець

e.g. Profits drive entrepreneurs to risk capital, hire employees and purchase the things they need to produce goods and services.

to set the price — встановити ціну

e.g. Monopolies can set the price at which their goods are
sold.

gross national product — валовий національний продукт
e.g. The total value of the goods and services produced
by the economy in a single year is called the gross national
product (GNP).

household — домашнє господарство; сім'я

e.g. We live in what economists like to call households.

II. Give English equivalents of the following:

економічні стимули підприємець

кінцевий продукт обмежувати

діяльність опора

використовувати (чиє-небудь) майно

приймати рішення домашнє

господарство стабільні ціни

наймати на роботу валовий

національний продукт

III. Fill in the blanks with appropriate words:

1. Property owners know they will resources

make ... if they can produce goods and a profit
services that buyers want, at ... they the answers
are willing to pay. consumers

2. Government in America functions at levels
three ... . prices

3. In our economic lives we spend ... a price
to buy the things we want. money

4. Price stability refers to time during
which ... remain constant.

5. As a national goal, economic efficiency
refers to the entire economy's ability to
get the most out of its limited ....

6. ... are people who use goods and
services to satisfy their wants.

7. The price system provides ... to the
fundamental questions of what goods and
services will be produced, how they will
be produced, and who will receive them.

IV. Read and translate the text:

The «pillars» of economic system are private property, the price system and competition.

The right to private property gives the owners of natural resources and capital the incentive to use their assets as they can. The price system provides the answers to the fundamental questions of: «What goods and services will be produced?»; «How they will be produced?» and «Who will receive them?». Competition refers to the rivalry among buyers and among filers.

Economic incentives influence our decisions about what and where to buy. The desire to achieve the greatest profit for our efforts is the principal economic incentive in the American and other market economies. Economists refer to this as economic self-interest.

Profits are what remains after the costs of production have been deducted from sales. The quest for profits, or the profit motive, as it is often called, is the force that drives our economic system.

People in business buy or sell land or other natural resources if they think they can profit from the transaction. They also put those resources to use in such a way as to make the greatest profit. Profits affect the allocation of labor, influence the allocation of capital resources. Profits drive entrepreneurs to risk capital, hire employees and purchase the things they need to produce goods and services. Profits also provide the incentive to improve products, reduce costs and outsell the competition.

Government in America functions at three levels:

federal, state and local.

Governments

— compel people to sell their property for public use through the power of eminent domain;

— decide who may sell electric power in a geographic region;

— control which medicines may be sold commercially;

— licence certain businesses (such as banks, barber shops, taxi cabs and restaurants);

— pay dairy farmers for not producing as much milk as they can;

— forbid export of certain machinery to specific foreign countries;

— establish the minimum wages employers must pay;

— issue permits for and inspect construction of homes and buildings.

The following economic responsibilities are best fulfilled by government:

— safeguarding the market system;

— providing public goods and services;

— dealing with externalities;

— assisting those in need;

— helping specific groups;

— stabilizing the economy.

The gross national product, or GNP, is the total value of all the goods and services produced by the American economy in a single year. Government transfer payments, payments like Social Security benefits, pensions, welfare, and interest on government debt represent a significant percentage of GNP.

In order to calculate the GNP, government economists add the amounts that were spent by the three elements of the economy (households, business and government) to purchase the finished products. We can express this mathematically as C + I + G = GNP, where:

C — consumer household spending; I — investment, or business;

G — government purchases of goods and services (pp.11 — 22)*.

V. Answer the following questions:

1. What are the «pillars» of economic system?

2. What does the right to private property give the owners of natural resources and capital?

3. How do prices influence American economic system? Give your own examples.

4. What does competition refer to?

5. How do you understand the term «profits».

6. What is the force that drives our economic system?

7. What is the role of profits in the economic system?

8. What economic responsibilities are best fulfilled by go­vernment?

9. What is «the gross national product»?

VI. Define the terms:

competition
economic self-interest
profit motive
private property

GNP

consumers

profit

price system

VII. Translate into English:

1. Приватна власність, цінова система, конкуренція — головні «опори» економічної системи. 2. Цінова система відповідає на такі питання: а) які товари та послуги вироблятимуться? 6) як їх вироблятимуть? в) хто їх отримуватиме? 3. Економічні стимули впливають на наше рішення, що і де купити. 4. Бізнесмени купують або продають землю чи інші природні ресурси, якщо сподіваються на прибуток від цієї угоди. 5. Валовий національний продукт — це загальна вартість усіх товарів і послуг, вироблених за один рік. 6. Для того щоб купити щось, треба мати гроші. 7. Спо­живачі — це люди, які користуються товарами та послугами для задоволення своїх потреб.

VIII. Read and dramatize the following dialogue:

Mary (a student): Would it be troubling you too much, Mr.Brown, if I ask you some questions about eco­nomics?

Mr. Brown (an American teacher of economics): Not at all, dear. I'll answer all your questions with great pleasure, but what particulars are you interested in?

M.: I'm mostly interested in everything concerning the

American economic system.

Mr. B.: Well, ask your questions and I'll do my best to satisfy you.

M.: Thank you. First of all I should like to know what is Adam Smith and why is he considered «the father of modern economics»?

Mr. B.: Well, you see, 1776' the year that we associate with the signing of the Declaration of Independence, also marked the publication in England of one of the most influential books of our time «The Wealth of Nations» written by Adam Smith. It earned the author the title «The father of economics».

M.: Did he describe the principal elements of the economic

system in this book?

Mr. B.: Yes, he did. He differed with the physiocrats who argued that land was the only source of wealth. He also disagreed with the mercantilists who measured the wealth of a nation by its money supply, and who called for government regulation of the economy in order to promote a «favorable balance of trade».

M.: In Smith's view a nation's wealth was dependent upon

production, not agriculture alone, wasn't it?

Mr. B.: Yes, it was. How much it produced, he believed, depended upon how well it combined labor and the other factors of production. The more efficient the combination?, the greater the output, and the greater the nation’s welth.

The heart of Smith's economic philosophy was his belief that the economy would work best if left to function on its own without government regulation. In those circumstances, self-interest would lead business firms to produce only those products that consumers wanted and to produce them at the lowest possible cost. They would do this, not as a means of benefitting society, but in an effort to outperform their competitors and gain the greatest profit. But all this self-interest would benefit society as a whole by providing it with more and better goods and services, at the lowest prices.

M.: Now, I know why Adam Smith is considered «the father of economics». I think that the other sections dealing with the factors of production, money and international trade are as meaningful today as when they were first written.

Mr. B.: Yes, of course. Adam Smith gave the best description of the principles upon which our economic systems are based.

IX. Make your own dialogue using the following words, expressions and word-combinations:

the role of government price

system private property

gross national product

free enterprice

the American economic system

competition

X. Open the brackets using the Present Indefinite Tense in the Passive Voice:

Model: Every society (to face) with the identical problem of scarcity.

Every society is faced with the identical problem of scarcity.

1. Human wants (to unlimit), but the resources necessary to satisfy those wants (to limit). 2. The total value of the goods and services produced by the economy in a single year (to call) the gross national product (GNP). 3. Mr. Redd (to offer) an excellent price for selling his land. 4. The term capital (to use) often by business people. 5. Monopolies can set the price at which their goods (to sell).

XI. Read and change the sentences according to the model:

Adam Smith describes the principal elements of the economic system in his book «The Wealth of Nations».

The principal elements of the economic system are described by Adam Smith in his book «The Wealth of Nations».

1. Everything concerning the American economic system interests me. 2. They consider Adam Smith «the father of modern economics». 3. Economic incentives influence our decisions about what and where to buy. 4. Economic forces affect decisions in the world of business. 5. Prices direct market economies.

XII. Translate into English:

1. Рентою називають ціну за користування землею. 2. Термін «капітал» часто вживається бізнесменами. 3. Еко­номічні системи можуть бути класифіковані як традиційні, загальні та ринкові. 4. Людей, які користуються товарами та послугами для задоволення своїх потреб, називають спо­живачами. 5. Загальна вартість усіх товарів і послуг за один рік називається валовим національним продуктом.

XIII. Communicative situations:

Marta Redd owns a 10-acre plot of ground at the eastern edge of town. It is next to an area that is «going commercial». Last month Ms. Redd was offered an excellent price for selling her land to the Blue Manufacturing Company. Blue wanted to erect a new plant on the land. Ms. Redd knew that if she sold her acreage to the firm she would receive more than if she continued to lease it to Frank White, a farmer who is presently growing vegetables on the land.

a) Why did Blue Manufacturing want to buy Ms. Redd's land?

b) Why is Redd likely to accept Blue's offer?

c) How will these events affect White?

d) Explain how the story illustrates the ways that the opportunity cost of land, profits, and the profit motive affect the use of land.

e) Describe a situation in which the profit motive would affect the use of another productive resource (labor, capital, or entrepreneurship).

Lesson 3

SUPPLY, DEMAND AND MARKET PRICES

I. Read and memorize the following words, word- combinations and word-groups:

market economy — ринкова економіка

price — ціна

e.g. Market economies are directed by prices,

to ration — розподіляти, нормувати, видавати e.g. Prices ration scarce resources, and they motivate production.

to attend an auction — відвідувати аукціон e.g. Did you ever attend an auction? rationing effect — раціональний вплив e.g. What you saw at the auction was the rationing effect of prices.

items for sale — товари для продажу

bidder — покупець на аукціоні

e.g. The person leading the sale (the «auctioneer») offered individual items for sale to the highest bidder.

to drive out of the market — витіснити з ринку e.g. Price decreases drive producers out of the market,

the level of output — рівень виробництва e.g. Prices encourage producers to increase or decrease their level of output.

the law of demand — закон попиту

quantity of goods and services — кількість товарів і по­слуг

e.g. The law of demand describes the relationship between prices and the quantity of goods and services that would be purchased at each price.

elasticity — еластичність; гнучкість

e.g. Elasticity describes how much a change in price affects the quantity demanded.

supply — постачання; пропозиція

e.g. Supply refers to the number of items that sellers will offer for sale at different prices at a particular time and place.

II. Give English equivalents of the following:

покупець на аукціоні еластичність

вартість продукції взаємодія

закон пропозиції закон попиту

кількість товарів і послуг

зміни в постачанні

відвідувати аукціон

ринкова ціна

товари для продажу

рівень виробництва

III. Fill in the blanks with appropriate words:

1. Economists often use and explain their work. prices

2. Market economics are directed by ... . sellers

... is a consumer's willingness and ability to buy a product or service at demand

a particular time and place. tables and graphs

3. More people can afford to buy ... at a lower price than at a higher price. consumers

4. Buyers and sellers have full knowledge of the prices price quoted in market

the ... . auction

5. In some countries prices are set by the ... . an item

6. Many ... who are concerned about the environment are refusing to buy

soft drinks in plastics.

7. ... will offer more of a product at a higher price and less at a lower price.

IV. Read and translate the text:

Market economies are directed by prices. Prices ration scarce recources, and they motivate production. As a general rule, the more scarce something is, the higher its price will be, and the fewer people will want to buy it. Economists describe this as the rationing effect of prices.

Prices encourage producers to increase or decrease their level of output. Economists refer to this as the production- motivating function of prices. Prices send out «signals» to
buyers and seller, keeping the economy responsive to the forces of supply and demand.

In a free market economy, prices are determined by the interaction of the forces of supply and demand. Perfectly competitive markets are those in which many buyers and sellers,
with full knowledge of market conditions, buy and sell products that are identical to one another.
Demand is a consumer's willingness and ability to buy a product or service at a particular time and place. If you would love to own a new pair of athletic shoes but can't afford
them, economists would describe that your feeling are desire, not demand. If, however, you had the money and were ready to spend it on shoes, you would be included in their demand calculation.

The law of demand describes the relationship between prices and the quantity of goods and services that would be purchased at each price. It says that all else being equal, more items will be sold at a lower price than at a higher price.

The degree to which price changes affect demand will depend upon the elasticity of demand for a particular item.

It total revenue increased following a price decrease, demand would be elastic. If the price decrease led to a decrease in total revenue, the demand for the item would be described as inelastic.

The demand for some goods and services will be inelastic for one or more of the following reasons:

— They are necessities.

— It is difficult to find substitutes.

— They are relatively inexpensive.

— It is difficult to delay a purchase.

Sometimes things happen that change the demand for an item at each and every price. When this occurs, we have an increase or a decrease in demand.

Supply, which is the quantity of goods or services that sellers offer for sale at all possible prices at a particular time and place, varies directly with price. In other words, at a higher price, more goods and services will be offered for sale at a lower one, and vice versa.

The price at which goods and services actually change hands is known as the equilibrium, or market price. It is the point at which the quantity demanded exactly equals the quantity supplied. Market price can be represented graphically as the point of intersection of the supply and demand curves.

Shifts in demand or supply will affect market price. When everything else is held constant, an increase in demand will, result in an increase in market price, and vice versa. Similarly, an increase in supply will result in a decrease in price, and
vice versa.

The market price is the only price that can exist for any length of time under perfect competition conditions. Perfect competition exists when the following conditions prevail:

— Buyers and sellers have full knowledge of the prices quoted in the market.

— There are many buyers and sellers so that no individual or group can control prices.

— The products are identical with one another. Therefore, it would not make sense for buyers to pay more than the market price, nor for sellers to accept less.

— Buyers and sellers are free to enter or leave the market at will (pp.23 — 34).

V. Answer the following questions:

1. What is the rationing effect of prices?

2. What are the functions of prices?

3. How are prices determined in a free market economy?

4. What causes prices to rise and fall in a market economy?

5. What is demand?

6. What does the low of demand describe?

7. When is demand described as elastic?

8. Why is the demand for some goods and services inelastic?

9. What does supply refer tp?

10. What is equilibrium or market price?

VI. Define the terms:

market price

rationing effect of prices demand

perfectly competitive markets buyers

production-motivating function of prices sellers

VII. Translate into English:

1. Ціни управляють ринковою економікою. 2. Ціни спо­нукають виробників до збільшення або зниження рівня ви­пуску товарів. 3. У вільній ринковій економіці ціни визнача­ються взаємодією чинників пропозицій і попиту. 4. Ціна, за якою фактично продають товари та послуги, називається ринковою ціною. 5. Зміни в попиті та пропозиції впливати­муть на ринкові ціни. 6. Ринкова ціна — єдина, яка може існувати протягом певного часу в умовах цілковитої кон­куренції. 7. Попит — це бажання та спроможність спожи­вача купити товар чи послугу в певний час і в певному місці.

VIII. Read and dramatize the following dialogue:

Maurice: Haven't seen you for a long time. What have you been busy with?

Lusy: I've been pretty busy. Do you know my friend Susan?

M.: Yes, I do.

L.: I went into business with her.

M.: Really? How is it going on?

L.: Fine, thank you.

M.: What kind of business is it?

L.: We developed our own special recipe for homemade ice-cream, and we decided to sell ice-cream cones to students every day after school.

M.: How much does your ice-cream cost?

L.: It costs $1.60 per cone.

M.: How did you define the cost of your product?

L.: Oh, it was not very difficult. First of all we decided to learn the demand of our consumers. For this purpose we conducted a survey to see if students were interested in
the idea. Each student was asked the following question: «Would you spend $.50 to have an ice-cream cone for and after school snack?» This question was repeated using
higher and higher prices up to $25 per cone. The results of the survey were assembled in a demand schedule, a table showing the quantities of a product that would be
purchased at various prices at a given time.

M.: Oh, it is very interesting. I'd like to see this demand schedule for ice-cream cones.

L.: If you wonder I can show it to you. I've got it with me. Look here!

Demand schedule for ice-cream cones

Price Per Cone Quantity Demanded

$.50 190

.75 175

1.00 125

1.25 85

1.50 65

1.75 50

2.00 40

M.: The survey results illustrated the law of demand in action, didn't they?

L.: You are right. We also made the demand curve, which illustrated the demand for ice-cream cones. It also enabled us to estimate what the demand would be for those
prices falling in between the prices we surveyed. Although the students were not questioned about how many cones they would buy if the selling price were $1.60, the curve lets us estimate the number would be about 55.

M.: Nice for you. Now you seem to know a lot about business.

L.: Not everything yet. The subject becomes quite technical. M.: I'm glad to hear it. It's time to go now. See you later. Bye!

IX. Make up your own dialogue using the following words, expressions and words-combinations:

quantity of goods and services

rationing effect of price

to offer items for sale

to attend an auction

market economy

auctioneer

elasticity

bidder

X. Refer the following statements to the past:

Model: Economic incentives influence our decision about what and where to buy.

Economic incentives influenced our decision about what and where to buy.

1. What you see at the auction is the rationing effect of prices. 2. Prices encourage producers to increase their level of output. 3. The law of demand describes the relation­ship between prices and the quantity of goods and services. 4.They sell these goods because they want to have a profit from such transaction. 5. Adam Smith describes the principal elements of the economic system in his book «The Wealth of Nations».

XI. Ask questions to which the following statements are answers:

Model: This work seemed easy. Did this work seem easy?

1. The development of modern economics began in the 17th century. 2. Large corporations used economists to study the way to do business. 3. Peter received his first paycheck of $135 yesterday. 4. I went into business last year. 5. First of all we decided to learn the demand of our consumers.

XII. Translate into English:

1. Йому було нелегко розпочати власну справу. 2. Зміни попиту та пропозиції вплинули на ринкові ціни. 3. Ціни впли­нули на зменшення рівня випуску товарів. 4. Для того щоб вивчити попит споживачів, ми провели низку спостережень. 5. Ми переглянули результати спостережень і зробили для себе певні висновки.

XIII. Communicative situations:

1. If you owned an ice-cream shop at a seaside resort and additional ice-cream shops were opening in your area because of increasing prices, how would you take advantage of the use of substitute products to compete more effectively?

How would you make use of the concept of demand elasticity in making decisions whether or not to raise your prices for your specially items such as shakes, sundaes, and banana splits?

2. When the forces of supply and demand are at work in a market economy, the equilibrium price is the only one that matters. All other prices are irrelevant (beside the point).

Explain this statement.

3. The law of demand works because consumers have the ability to substitute. The law of supply works because producers have the ability to substitute.

Explain these statements.

Lesson 4

THE CONSUMER ІП OUR ECONOMY

I. Read and memorize the following words, word- combinations and word-groups:

to meet one's needs — задовольняти потреби e.g. Many businesses work very hard to meet your needs and wants.

wage(s) (syn. salary) — заробітна плата e.g. In return for working, you will receive a wage or salary.

wealth — багатство

e.g. Wealth is the value of the things you own.

to deposit money in a savings accout — класти гроші на ощадний рахунок

e.g. We decided to deposit money in a savings account,

to earn interest — одержувати відсотки

to loan — позичати, давати позику

e.g. Wealth, in the form of money that is loaned to others or deposited in a savings account, will earn interest,

expenditures — витрати

savings — заощадження

e.g. The Greens plan their expenditures and savings very carefully.

to make one's decision — приймати рішення e.g. When the time comes to make a major purchase, we compare products and prices before making our decision,

to keep track — дотримуватися курсу e.g. Most of the time, we are able to keep track of our expenditures (the money spent), so that we are able to meet our immediate needs.

to exceed — перевищувати surplus — лишок

e.g. Budgets in which income exceeds expenditures will have a surplus.

rate of return — норма прибутку

e.g. The rate of return is expressed as a percentage of the amount on deposit for a period of a year,

compound interest — складні відсотки e.g. Most accounts offer compound interest, yield — прибуток

e.g. It is important to distinguish between rate of return and yield, the actual amount of interest earned,

to share risk — розподіляти страхову суму e.g. Insurance enables people to share risk, endowment insurance — страхування-вклад e.g. Endowment insurance protects the insured for a specific number of years.

consumer credit — споживчий кредит e.g. Consumer credit provides cash, goods, or services now, while spreading repayment into the future,

finance charge — фінансові витрати e.g. Finance charge is the total amount you pay to use credit.

passbook loan — книжка займу

e.g. If you have a savings account, you may to apply for a passbook loan against your balance in that account.

II. Give English equivalents of the following:

класти гроші на банківський рахунок дотримуватися курсу

одержувати відсотки фінансові витрати

захист інтересів споживача витрачати гроші

норма прибутку складні відсотки

джерело прибутку страхування-вклад

споживчий кредит приймати рішення

задовольняти потреби

Ill. Fill in the blanks with appropriate words:

1. ... refers to earning paid on a weekly or credit
monthly basis. yield

2. Interest and rent are two forms of ... that income
can be earned by wealth. Insurance

3. ... is a financial plan that summarizes income salary
and expenditures over a period of time. a budget

4. Banks and savings institutions protect your ... money
against fire, theft and other disasters.

5. ... depends on the rate of return and the
frequency of compounding.

6. Property ... protects policyholders against
the loss or damage of their property.

7. Change accounts, credit cards, installment
plans, car loans and household mortgages
are some of the best known forms of ... .

IV. Read and translate the text:

Most of the income you are likely to earn will come from work. In return for working, you will receive a wage or salary. (The term «wage» typically refers to the earning of workers paid by the hour or unit of production. «Salary» refers to earning paid on a weekly or monthly basis.) How much you earn will depend on your job, your abilities, your performance, and a number of other factors.

Wealth can be expressed as the value of the things you own. Adding the value of all your possesions by banks accounts, savings, and the like will give you the total amount of your wealth.

Used in certain ways, wealth can earn income. If you owned a motorcycle, you might be able to let others use it for a fee. In that instance economists would say that you used your wealth to earn «rent». Wealth in the form of money that is loaned to others or deposited in a savings account will earn interest. Interest and rent are the two forms of income that can be earned by wealth.

The number and value of things we are able to buy depends upon the size of our income and how wisely we spend it.

To help keep track of income and expenditures, many people use personal budgets. A budget is a financial plan that summarizes income and expenditures over a period of time.
When a budget has expenses that exactly equal income, it is said to be balanced. When proposed expenses are greater than expected income, the budget is said to have a deficit.

Budgets in which income exceeds expenditures will have a surplus.

Although there are as many ways to prepare a budget as there are people who use them, the process usually involves three steps: setting financial goals, estimating income, and planning expenditures.

Bank and savings institutions protect your money against fire, theft and other disasters.

One of the mairi reasons people save their money is to earn interest, the income from allowing someone else to use one's capital. The amount that they earn is known as the rate of return which is expressed as a percentage of the amount on deposit for a period of a year. A deposit of $100 in an account paying 5 percent, for example, would earn a total of $5 in interest over a year. The $5 is the return; the rate of return is 5 percept ($5 divided by $100).

Most accounts offer compound interest. This is interest computed on the principal and on the interest that was previously paid.

The rate of return offered by banks and savings institutions will vary with economic conditions and the length of time they hold your money. It is also important to distinguish between rate of return and yield, the actual amount of interest earned. Yield depends on the rate of return and the frequency of compounding.

Liquidity is a measure of the ease with which you can convert your savings to cash. The easier it is to withdraw your funds, the greater is the liquidity.

Theft, accident, sickness, and natural disasters are daily risks of life. Just as we do our best to avoid the physical consequences of these perils, we can also protect ourselves from their financial cost. We do this by sharing the risk of that loss with others through insurance^ You can purchase insurance on your life and to pay your medical bills. You can purchase property insurance to protect your car, home, and other major possessions from damage or theft. Liability insurance protects you if you should injure others or damage their property.

One of the principal services offered by savings institutions and banks is the checking account. Some of the things that consumers need to know in using and maintaining a checking account are reviewed in the Study Guide.

Credit allows you to purchase the things you want now and pay for them over a special period of time. Credit can be useful but it does require good character, capital, and capacity to repay the loan. Credit can be expensive. Two of the most important things to look for when shopping for a loan are the finance charge and the APR.

The purpose of advertising is to sell goods and services. While certain advertising techniques benefit consumers, others do not. Consequently, consumers ought to be familiar with the kinds of strategies that advertisers use to sell their products.

The principal responsibility for consumer protection lies with government agencies at the federal state and local levels. There are, however, a number of organizations, sponsored by the private sector, whose purpose is to protect consumers. These include such well-known institutions as the Better Business Bureau and local Chambers of Commerce.

Because consumers make up the largest economic sector (business and government are the other two), the level of consumer spending has a direct impact on the economy as a whole (pp. 35—48).

V. Answer the following questions:

1. What is the difference between «wage» and «salary»?

2. How can «wealth» be expressed?

3. How can you use your wealth to get income? Give your examples.

4. What is a budget?

5. When is a budget said to have a deficit and when a sur­plus?

6. What three steps are involved to prepare a budget?

7. What makes up your personal budget?

8. What is the rate of return?

9. What is liquidity?

10. What does credit allow you?

11. What is the purpose of advertising?

VI. Define the terms:

Wage budget

Liquidity the rate of return

Salary wealth

Surplus compound interest

VII. Translate into English:

1. Велика кількість підприємств старанно працюють, щоб задовольнити ваші потреби. 2. Ми вирішили покласти гроші на рахунок у банку. 3. Фінансові витрати — це загальна сума, яку ви сплачуєте, щоб скористатися кредитом. 4. Стра­ хування-вклад захищає страхувальника кілька років. 5. За свою роботу ви отримуєте заробітну плату. 6. Підсуму­вавши вартість вашої власності, банківських рахунків, зао­щаджень, ви отримуєте загальну суму вашого багатства. 7. Кількість і вартість речей, які ви спроможні купити, за­лежить від розміру вашого прибутку та від того, як ро­зумно ви витратите його. 8. Банки та ощадні установи до­поможуть захистити ваші гроші від пожежі, крадіжки та інших нещасних випадків.

VIII. Read and dramatize the following dialogue:

A. Sorry, I will be very obliged to you if you will answer some of my questions.

B. : O.K. I'm at your disposal.

A.: I know that most of the nation's personal savings are held by the commercial banks, different types of savings in­stitutions, and credit unions. The deposits held by these institutions are insured by agencies of the federal govern­ment. But I wonder what kinds of accounts can be offered by savings institutions? 6.; Well, savings institutions offer the following kinds of accounts: passbook and statement saving accounts, NOW (Negotiable Order of Withdrawal) accounts, money-market accounts, certificates of deposit, credit-union accounts. U.S. savings bonds and money-market bonds.

A. : O.K. It's very interesting. Can you tell me some more about passbook and statement accounts?

B. : Oh, yes, of course. I can. The safety of your money and high liquidity are the most important advantages of these accounts. Minimum balance requirements are usually quite low, and your savings can be withdrawn at any time.

A. : Is there any disadvantage to this kind of account?

B. : The disadvantage of them is that they pay relatively low interest rates.

A. : I see. And what about NOW and money-market accounts? Please, some words about them.

B. : Well, NOW accounts pay interest and allow the depositor to write checks. NOW accounts generally offer a slighty lower rate of return than savings accounts. Money-market accounts allow you to write a limited number of checks while participating in the «money-market» where banks and other businesses buy and sell short-term credit instruments and notes that come due in a year or less. The rate of return for money market accounts is usually higher

than for passbook savings accounts. Would you like me to tell you about certificates of deposit and credit-union accounts?

A.: Oh, no, thank you very much. But it seems to me I know everything about them. Certificates of deposit, or CD's, pay the highest rates of interest offered by banks and savings institutions. They require the money to be left on deposit for a specified period of time that can run from a few weeks to five of more years. The money can be withdrawn early, if necessary, but not without a penalty.

Credit unions often serve people who have the same employer, work in the same industry, or belong to a particular church, labor union, or club. The rate of return offered by credit unions is higher than that of the other institutions. But what do you know about U.S. savings bonds and money-market funds?

B.: U.S. savings bonds can be purchased at most savings institutions. Guaranteed by the United States government, they are one of the safest investments one can make. After five years bonds earn a variable rate adjusted every six months. And money-market funds use the resources of their investors to buy money-market certificates. Money- market funds generally pay a higher rate of return than savings and NOW accounts. Unlike other accounts at savings institutions, money-market fund accounts are not insured nor do they provide check-writing privileges.

A.: I'm more than grateful to you for such important information. Thank you ever so much.

B: Don't mention it.

IX. Make up your own dialogue using the following words, expressions and word-combinations:

to deposit money in a savings account wage

to make one’s decision wealth

to earn interest to loan

finance charge rate of return

X. Express the following in the Passive Voice:

Model: The health maintenance organization or HMO provided its members with complete medical coverage.

The members of the health maintenance organi­zation were provided with complete medical coverage.

1. Partners brought additional funds to a proprietorship. 2. You received a wage in return for working. 3. The Greens planned their expenditure and savings very carefully. 4. We compared products and prices before making a decision. 5. Consumer credit provided cash, goods and services. 6. In 1990, consumers purchased over 60 percent of the GNP — more than $3 trillion in goods and services.

XI. Ask questions to the following sentences:

Model: Almost everyone was covered by some form of insurance.

Who was covered by some form of insurance?

1. A direct relationship between the kinds of goods and services bought and the income of the purchaser was shown by a Prussian statistician by the name of Ernst Engel, back in the 19th century. 2. As consumers, all of us were limited by what we can spend. 3. Most of the nations' personal sa­vings were held by the commercial banks, different types of savings institutions, and credit unions. 4. Consumers were tempted to spend money for products they did not really need. 5. Group policies were offered by employers, pro­fessional associations, unions, and other organizations to their employees or members. 6. At the end of the spe­cific number of years the full amount was paid to the poli­cyholders.

XII. Translate into English:

1. Гроші були покладені на банківський рахунок. 2. Кіль­кість речей, які ми спроможні були купити, залежала від розміру нашого прибутку. 3. Ваші гроші були захи­щені від пожежі, крадіжки та інших нещасних випадків банками та ощадними установами. 4. Земля та інші при­родні ресурси були закуплені бізнесменами в надії на при­буток. 5. Майже всі члени нашої родини були застрахо­вані.

XIII. Communicative situation

1. As total consumption in the United States has gone up, the

percent spent on different types of goods has changed.

Spending for some goods has increased while that for others

Most states require drivers to have liability insurance. Why? You can choose whether you want collision insurance for a car. Why would someone choose not to buy collision insurance? Under what circumstances might you want to buy collision insurance

has decreased. Explain the trends for each of the following goods:

a) Spending as a percent of total consumption has decreased for good, clothing, household operation.

b) Spending as a percent of total consumption has increased for housing, medical care, transportation and travel.

2. Two hundred families live in the village of Middleville. Every year, for as long as anyone can remember, there has been one burglary. The average loss from the thefts has been $5,000.

a) How could the people of Middleville insure themselves against the financial costs of a burglary?

b) Why is insurance often described as a «method of sharing risk»?

3. Most states require drivers to have liability insurance. Why? You can choose whether you want collision insurance for a car. Why would someone choose not to buy collision insurance? Under what circumstances might you want to buy collision insurance?

Lesson 5

LAUNCHING A BUSINESS

I. Read and memorize the following words, word- combinations and word-groups:

to start a business [syn. to launch a business) — розпочати справу (бізнес)

e.g. Those thinking of starting a business should keep informed about the kinds of opportunities that exist, the personal qualities needed for success and the kinds of training available to prepare for the world of business.

to operate a business — керувати справою (бізнесом) e.g. Many colleges now offer programs that teach students how to start and operate a business.

to face a problem — стикатися з проблемою e.g. Small businesses face many problems, to risk (syn. to run the risk) — ризикувати e.g. Corporate leaders may risk their own jobs when they make major decisions that affect the future of corporation negatively.

sole proprietorship — одноосібне володіння

e.g. A sole proprietorship is a business owned by one person.

to pay taxes — сплачувати податки

e.g. Sole proprietors have minimal legal restrictions and do not have to pay the special taxes placed on corporations,

to assume the debts — брати на себе сплату боргів e.g. If a business fails, the owner must personally assume the debts.

stockholder — акціонер, власник акцій e.g. Ownership of a corporation is represented by shares of stock, and for that reason corporate owners are known as stockholders.

partnership — товариство, компанія e.g. A partnership is a business organization that is owned by two or more persons.