A1. Read the text. Answer the questions to it and entitle it.

Date: 2015-10-07; view: 578.

a) Why is economics a vital discipline?

b) Is economics a how-to-make money area of study?

The study of economics helps us in many ways, especially in our roles as individuals, as members of our communities, and as global citizens.

Have you ever noticed that very few people are satisfied with the things they have? For example, someone without a home may want a small one; someone else with a small home may want a larger one; someone with a large home may want a mansion. Whether they are rich or poor, most people seem to want more than they already have. In fact, if each of us were to recover these costs by charging more for its other products. In the end, you may actually be the one who pays for the "free" lunch!

Realistically, most things in life are not free, because someone has to pay for producing them in the first place. If you make a list of all the things we want, it would most likely include more things than we could ever hope to obtain.

The fundamental economic problem facing all societies is that of scarcity. Scarcity is the condition that results from society not having enough resources to produce all the things people would like to have. Scarcity affects almost every decision we make. This is where economics comes in. Economics is the study of how people try to satisfy seemingly unlimited and competing wants through the careful use of relatively scarce resources.

Economists often talk about people's needs and wants. A need is a basic requirement for survival, such as food, clothing, and shelter. A want is simply something we would like to have but is not necessary for survival. Food, for example, is needed for survival. Because many foods will satisfy the need for nourishment, the range of things represented by the term want is much broader than that represented by the term need. Because we live in a world of relatively scarce resources, we have to make careful economic choices about the way we use these resources.

The first question is WHAT to produce. For example, should a society direct most of its resources to the production of military equipment or to other items such as food, clothing, or housing? Suppose the decision is to produce housing. Should the limited resources be used to build low-income, middle-income, or upper-income housing? A society cannot have everything its people want, so it must decide.

The second question is HOW to produce. Should factory owners use automated production methods that require more machines and fewer workers, or should they use fewer machines and more workers? If a community has many unemployed people, using more workers might be better. On the other hand, in countries where machinery is widely available, automation can often lower production costs. Lower costs make manufactured items less expensive and, therefore, available to more people.

The third question is FOR WHOM to produce. After a society decides WHAT and HOW to produce, it must decide who will receive the things produced. If a society decides to produce housing, for example, should it be the kind of housing that is wanted by low-income workers, middle-income professional people, or the very rich? If there are not enough houses for everyone, a society has to make a choice about who will receive the existing supply.

These questions concerning WHAT, HOW, and FOR WHOM to produce are never easy for any society to answer. Nevertheless, they must be answered as long as there are not enough resources to satisfy people's seemingly unlimited wants and needs.

People cannot satisfy all their wants and needs because productive resources are scarce. The factors of production, or resources required to produce the things we would like to have, are land, capital, labor, and entrepreneurs. All four are required to produce goods and services.

In economics, land refers to the "gifts of nature," or natural resources not created by people. "Land" includes deserts, fertile fields, forests, mineral deposits, livestock, sunshine, and the climate necessary to grow crops. Because a finite amount of natural resources are available at any given time, economists tend to think of land as being fixed, or in limited supply.

Another factor of production is capital, sometimes called capital goods—the tools, equipment, machinery, and factories used in the production of goods and services. Capital is unique because it is the result of produc­tion. A bulldozer, for example, is a capital good used in construction. When it was built in a factory, it was the result of production involving other capital goods. The computers in your school that are used to produce the service of education also are capital goods.

A third factor of production is labor— people with all their efforts, abilities, and skills. This category includes all people except a unique group of individuals called entrepreneurs, whom we single out because of their special role in the economy. Historically, factors such as birthrates, immigration, famine, war, and disease have had a dramatic impact on the quantity and quality of labor.

Economics is also a social science because it deals with the behavior of people as they deal with this basic issue.

Vocabulary

A2. Explain the significance of scarcity, economics, need, want, factors of production, land, capital, capital good, labor. In groups of four, discuss the following questions and report back to the entire class on your major conclusions.