III. Are the following statements true or false?

1. There are five main economic systems.

2. Economics is concerned with everyday issues, such as unemployment, prices, wages etc.

3. The allocation of scarce resources is the only subject matter of economics.

4. A cornerstone of the market system is that production alters swiftly to meet changing demands.

5. In a market economy the government takes all the decisions in the management of the economy.

6. If some economic decisions are taken by the government, we have a centralized economy.

7. Market economies are sometimes called “command economies”.

8. Command economies tend to be slow when responding to changes in people’s tastes and fashions.

9. There is no incentive for individuals to work hard in planned economies.

10. In a free market individual people are free to pursue their own interests.

11. In a market economy there is a maximal control on working conditions and safety standards concerning goods and services.

IV. Complete these sentences with the words in appropriate form and translate the sentences into Russian:

1. Economics is the study of how people choose _______scarce resources to satisfy their _____ .

2. It also deals with different _____ questions, especially ______ with labour, finance, taxation etc.

3. An economic system is the way in which a country uses its _____ to satisfy the demands of ___

for goods and services.

4. The more goods and services that can be produced, the higher the standard of living _____ by the country’s citizens.

5. Economists _________economic systems into ____ Western _________ are _____ mostly ________ economic systems in which economic events are the outcome of _________ decisions.

6. If government planners _______ some of the most important ________ decisions, the economy is __________.

7. Planned economies are economies with _____ of _____ , when the government _____ all ___ , decides ___ and ___ .

8. There is no ___ for individuals to work hard in planned economies.

9. ___ contains elements of both market and planned economies.

10. In a mixed economy the government and the private sector ___ in ___ .

V. Translate into English:

1. Решение вопроса о распределении ограниченных ресурсов в экономике (обществе) зависит от того, что именно, каким способом и для кого данное общество намерено производить.

2. Различают следующие виды экономических систем: рыночная, административно-командная и смешанного типа.

3. Рыночная экономика характеризуется частной собственностью на ресурсы и использованием системы рынков и цен для управления экономической деятельностью.

4. В рыночной экономике невелика или очень мала необходимость в планировании, контроле и широкомасштабном вмешательстве со стороны государства.

5. В плановой экономике все крупные решения, касающиеся производства, потребления и распределения продукции, принимаются центральным плановым органом.

6. В плановой экономике покупатели лишены возможности влиять на производство товаров.

7. Государство в условиях плановой экономики может гарантировать своим гражданам образование и медицинское обслуживание.

8. В реальной действительности экономические системы располагаются между чисто рыночной и плановой экономикой.

9. Смешанная экономика – это система, при которой частная собственность и рынок, а также правительство взаимодействуют в решении экономических проблем.

TOPIC 3.

FACTORS OF PRODUCTION

In economic theory, factors of production (or productive inputs) are the resources employed to produce goods and services. The factors of production include natural resources, human resources, capital and entrepreneurship. Each factor of production has a place in economic system, and each has a particular function. People who own or use a factor of production are expecting a “return or reward”. This generates income which, as it is spent, becomes a kind of fuel that drives the economy.

Natural Resources or «Land»

Natural resources are the things provided by nature that go into the creation of goods and services. They include such things as minerals, wildlife and timber 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.

Human Resources or «Labor»

Economists call the physical and mental effort that people put into the creation of goods and services labor. The price paid for the use of labor is called wages. Wages represent income to workers, who own their labor. Human labour produces both goods and services. The national labour force are those people who are available for work within the nation, i.e. the working population.

Capital

To the economist, physical capital (or «capital» as it is commonly called) is something created by people to produce other goods and services. A factory, tools and machines are capital resources because they can be used to produce other goods and services. 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. But money, as such, produces nothing: hence, it is not to be considered as an economic resource. Real capital— tools, machinery, and other productive equipment - is an economic resource; money or financial capital is not. The process of producing and accumulating capital goods is known as investment.

Entrepreneurship

Closely associated with labor is the concept of entrepreneurship, the managerial or organizational skills needed by most firms to produce goods and services. The entrepreneur brings together the other three factors of production. When they are successful, entrepreneurs earn profits. When they are not successful, they suffer losses. The reward to entrepreneurs for the risks, innovative ideas and efforts that they have put into the business, they obtain the money that remains after the owners of land, labor and capital have received their payments.