What is economics

Тext A. What is economics Text B. Basic conomic problem Text C. The key sentence of economics

Grammar: Articles ( basic ), Plurals

I. Practise the pronunciation of the following words:

a) stress the first syllable: service, possible, normative, positive, income, benefit, revenue, produce (n), suitable, poverty, quantity, output, owner, scarce;

b) stress the second syllable: economy, produce (v), consume, economist, resource, society, consumption, utility, disposal, available, improve, entire, activity, obtain, achieve, avoid, efficiency, forgo;

c) stress the third syllable: economics, satisfaction, distribution, economic.

II. Before you read answer the following questions:

1. What is economics?

2. What is the aim of economics?

3. What are economists concerned with?

III. Read and memorize the following words and word — combinations:

activity — діяльність

to achieve — отримувати

to be concerned with — бути пов’язаним з…

circular flow diagram — модуль макроекономічного кругообігу

to consume — споживати

costs - витрати

distribution — розподіл, розповсюдження

factors of production — чинники виробництва

full employment - повна зайнятість

goods and services — товари та послуги

household — домогосподарство

to obtain — отримуваит

output — готова продукція

owner — власник

production possibilities frontier — межа виробничих можливостей

revenue - дохід

scarce resources — обмежені ресурси

standard of living — рівень життя

to be willing and able — бути готовим та спроможним

IV. Text a What is economics

The economy is a part of our everyday lives. We spend much of our lives working to produce goods and services, We spend a good part of the remaining time consuming those goods and services. Even such simple things as reading, going to university, and lying on the beach can be described as economic activities.

Economics — is the study of economies, the study « what economists do •>. In general terms, economics is a social science concerned with using scarce resources to obtain the maximum satisfaction of the unlimited material wants of society. It studies the production, distribution, trade, and consumption of goods and services. The aim of economics is to help people to obtain the greatest possible satisfaction or utility out of the resources at their disposal — to do the best they can with what they have.

The main questions that an economy must answer are the following:

1. What to produce, and in what quantities?

2. How to produce?

3. For whom to produce?

When economists examine an economy, they not only what to know how the economy answers the three basic questions, but also how well. They focus on the means available for achieving major economic goals. These goals are:

a. Economic growth — the production of more and better goods and services, or a higher standard of living is desired.

b. Full employment — suitable jobs should be avail-able for all who are willing and able to work.

c Economic efficiency — we want to get the maximum benefits at the minimum costs from the limited productive resources.

d. Price level stability — inflation and deflation should be avoided.

Economists use models to improve our understanding of the world. The basic economic models are: the circular flow diagram_and the production possibilities frontier. The circular flow diagram is a model of the economy that shows how money flows through markets among households and firms. In a monetary economy, households, as resource owners, sell their resources to businesses and, as consumers, spend the money income received to buy goods and services. Businesses must buy resources to produce goods and services, their finished products are then sold to households in order to get revenues. The production possibilities frontier is a curve that shows the combinations of output that the economy can possibly produce using the available factors of production — land, labor, and capital. Because resources are scarce, an economy cannot have an unlimited output of goods and services. As a result, choices must be made on which goods and services to produce and which to forgo. Each point on the production possibilities curve shows maximum output of the two products. Limited resources prohibit production of any combination of goods lying outside the production possibilities curve. When an economy is operating efficiently on its frontier, it can only produce more of one good by producing less of others.

To analyse an economy economists use normative and positive economics. Economics is normative when it recommends one choice over another. Should the public sector (government) or the private sector (business) provide extra jobs for unemployed teenagers; tuition ought to be lowered so that more students can obtain an education. Whenever words such as «should» or «ought» appear in a sentence, there is a strong chance you are dealing with a normative statement. Conversely, economics is said to be positive when it describes the facts and the behaviour in the economy. What percent of teenagers are unemployed? If tuition is increased, the number of students will fall. Positive economics is concerned with « what is», while normative — « what ought to be». Since the 1930s economics is divided into two parts: macroeconomics and microeconomics. Macroeconomics focuses on the behaviour of an entire economy — the «big picture*. In macroeconomics we worry about such national goals as full employment, control of inflation, and economic growth. The main task of macroeconomics is to understand and improve the performance of the economy as a whole. Microeconomics is concerned with the details of this «big picture ». In microeconomics we focus on the individuals, firms, and government agencies. It concentrates upon the output or price of a specific product, the number of workers employed by a single firm, the revenue or income of a particular firm or household.