Who Will Get to Use the Goods and Services Produced by the Economy?
Date: 2015-10-07; view: 406.
No one can get all he wants. Whatever is produced in an economy it cannot be sufficient to meet everybody's wants. So a problem arises who will get and how much. This is the problem of distribution of wealth produced in an economy among different groups.
In fact, what determines who is to receive a particular share of the economic pie?
Production of goods and services is the result of the joint efforts of the owners of the four factors of production: land, labour, capital and entrepreneurship. So the total production is to be distributed among the owners of these factors of production. There is no system by which goods and services may directly be distributed among the factor owners. What they get is the money income in the form of rent, wages, interest and profits. With this income they buy the goods and services. How much can wage earners buy or land owners buy or owners of capital buy or profit earners buy? It will depend upon their income. So it is a problem of national income distribution.
The way that a country uses to solve three basic questions is based on its economic system.
An economic system is a mechanism that deals with the production, distribution and consumption of goods and services in a particular society.
The economic system consists of people, institutions and their relationships to resources. It addresses the problems* of economics, like the allocation and scarcity of resources.
There are four main types of economic systems present in the world: the traditional economy, the command economy, the market economy, and the mixed economy.
Ø Thetraditional economy is an economic system in which decisions about what, how, and for whom questions are made on the basis of customs, beliefs, religion, habit, and tradition.
People's economic roles are the same as those of their parents and grandparents. The ways they produce clothing and shelter are almost exactly the same as those used in the past. Traditions decide what these people work for a living, how their work is performed and who gets what is produced in such an economy. Since there is little produced, there is little to go around.
It has an advantage over other systems, in that there is little disagreement among members because relatively little is disputed. However, it restricts individual initiative and has a lack of advanced goods, new technology, and economic growth.
Ø The command economyis a society where the government institutions make all decisions concerning what will be produced, how it will be produced, and for whom it will be produced.
In a command economy, a central authority or agency draws up plans that establish what will be produced and when, sets production goals, and makes rules for distribution.
The government owns a considerable fraction of the means of production that is, they are publicly owned; it also owns and directs the operations of enterprises in most industries; it is the employer of most workers and tells them how to perform their work.
The individual has very little say* as to how the basic economic questions are answered.
Command economies don't help* their workers' incentives because everyone is given the same amount of goods and the same standard of living. A hard working citizen would not be given a chance to benefit from his extra work because he cannot increase his standard of living any greater than it currently is and he will earn just as much as a person who makes little or no effort.
Ø The market economy (or so called free market economy or free enterprise economy) is an economic system in which the decisions of many individual buyers and sellers interact to determine theanswers to the questions of What, How andWho.
In a market economy the fundamental economic questions are answered in the marketplace by the interaction of buyers and sellers. For example, the question of what to produce may be based on what trend is popular right now. The producers can create a product that they think they will sell well to the consumers in hope to make a profit. The question of how to produce is usually based on the producer's choice. They might decide to produce a product with more workers or they might decide to produce it more with machines and computers to save on labour costs*. The question involving for whom to produce is based on the consumers who decide what they want or need and what price they are willing to pay for it.
There are several essential elements in a market economy. One of these is private property-the right of individuals and businesses to own the means of production. In a free market economy, the major factors of production are privately owned. Private ownership gives people the incentive to use their property to produce things they will sell and make profits.
This desire to earn profits or theprofit motive is a second ingredient in a market economy.
The profit motive encourages sellers to produce at the lowest possible cost.
Ø The mixed economyis an economic system that answers the three economic questionsboth in the marketplace and in the government*.
A mixed economy contains both private and public, or state-owned (or controlled) enterprises and relies on the market but with a large dose of government intervention. A mixed economy usually involves producers working closer with the government to achieve economic goals. interference
Since no country in the world exemplifies either type of economic system in its pure form, all major economies are mixed ones because market forces as well as government decisions* play a role in answering the basic economic questions. The blend of market and government participation is different in different countries with mixed economies. The optimal level of government interference remains a problem which is of interest to economists.
COMMENTS:
the consumer's preferences – перевага / уподобання споживачів;
it addresses the problems -вона має справу з/займається проблемами;
the individual has very little say –окрема людина/особа мало що вирішує;
command economies don't help– командна економіка не заохочує;
labour costs –витрати на робочу силу;
both in the marketplace and in the government– як на ринку, так і в уряді;
market forces as well as government decisions– як ринки, так і урядові рішення.
Exercise 1. Read, translate into Ukrainian in written form and memorize the definitions of the following economic terms and concepts.
| 1. Command economy:an economic system in which major decisions concerning the resources allocation are made by agencies of the government. | ____________________________________________________________________________________________________________________________________________________________________________ |
| 2. Economic system:the approach a country uses to deal with the scarcity and achieve its economic goals. | _________________________________________________________________________________________________________________________________ |
| 3. Free enterprise system:an economic system based on the private ownership of property, competition, and the profit motive. | ____________________________________________________________________________________________________________________________________________________________________________ |
| 4. Market economy: an economic system in which national economic decisions are the result of decisions of individual buyers and sellers in the market place. | ____________________________________________________________________________________________________________________________________________________________________________ |
| 5. Mixed economy: an economic system that combines elements of public ownership of the means of production with private ownership. | ____________________________________________________________________________________________________________________________________________________________________________ |
| 6. Private property:the basic right of the free enterprise system that guarantees the individual's right to own, use, and dispose of things of value. | ____________________________________________________________________________________________________________________________________________________________________________ |
| 7. Profit motive: the desire to benefit from the investment of time and money in a business enterprise. | _________________________________________________________________________________________________________________________________ |
| 8. Traditional economy: an economic system that allocates scarce resources according to custom; change and growth are very slow; people do what their parents did before them; most goods are produced and consumed locally. | __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ___________________________________________ |
Exercise 2. Give the Ukrainian equivalents for the following.
1. to be at the dawn ______________________________________________________________
2. the problem of resources allocation _______________________________________________
3. the priority laid down in government policies ________________________________________
_______________________________________________________________________________
4. a key criterion ________________________________________________________________
5. a particular share ______________________________________________________________
6. wage earners _________________________________________________________________
7. to solve three basic questions ____________________________________________________
8. on the basis of ________________________________________________________________
9. there is little disagreement ______________________________________________________
10. a lack of advanced goods _______________________________________________________
11. to set production goals _________________________________________________________
12. to be publicly owned ___________________________________________________________
13. workers' incentives ____________________________________________________________
14. to interact to determine the answers to _____________________________________________
15. to be based on the producer's choice ______________________________________________
16. to give people the incentive _____________________________________________________
17. a second ingredient ____________________________________________________________
18. the profit motive ______________________________________________________________
19. both private and public enterprises ________________________________________________
20. the blend of market and government participation ____________________________________
_______________________________________________________________________________
Exercise 3. Find the English equivalents for the following.
1. повинне стикатися та розв'язувати ______________________________________________
_______________________________________________________________________________
2. взаємовиключні використання __________________________________________________
3. вибір, який необхідно зробити __________________________________________________
4. різні технології _______________________________________________________________
5. його не може бути у достатній кількості _________________________________________
6. спільні зусилля власників ______________________________________________________
7. власники факторів виробництва ________________________________________________
8. економічна система складається з _______________________________________________
9. заробляти на хліб ____________________________________________________________
10. обмежувати особисту ініціативу ________________________________________________
11. центральна влада ____________________________________________________________
12. розробляти план _____________________________________________________________
13. стільки ж скільки ____________________________________________________________
14. вільна ринкова економіка _____________________________________________________
15. мати хороший збут ___________________________________________________________
16. бути готовим заплатити _______________________________________________________
17. знаходитися/бути у приватній власності _________________________________________
18. це бажання отримати/заробити прибутки ________________________________________
19. за найменшими можливими витратами __________________________________________
20. значна доля урядового втручання _______________________________________________
21. як ринки, так і урядові рішення _________________________________________________
Exercise 4. Match the verbs/verbal phrases, prepositions (if necessary) and nouns/noun phrases as they occur together in the text: translate the expressions they make into Ukrainian.
| 1. | to depend | labour costs | |
| 2. | to be distributed | the owners | |
| 3. | to be based | from | economic goals |
| 4. | to work | on | the consumer's preferences |
| 5. | to draw | its economic system | |
| 6. | to set | among | his extra work |
| 7. | to direct | for | the operations |
| 8. | to benefit | up | production goals |
| 9. | to save | a living | |
| 10. | to achieve | plans |
Exercise 5. Match these adjectives and nouns as they occur together in the text: translate the expressions they make into Ukrainian.
| 1. | alternative | goods |
| 2. | a key | authority |
| 3. | various | elements |
| 4. | essential | production |
| 5. | the total | criterion |
| 6. | economic | uses |
| 7. | a central | techniques |
| 8. | different | roles |
Exercise 6. Match these nouns/noun phrases, prepositions (if necessary) and nouns/noun phrases as they occur together in the text: translate the expressions they make into Ukrainian.
| 1. | the factor | earners | |
| 2. | disagreement | of | living |
| 3. | standard | motive | |
| 4. | owners | with | mixed economies |
| 5. | profit | intervention | |
| 6. | countries | among | members |
| 7. | government | owners | |
| 8. | the profit | capital |
Exercise 7. Copy out of the text the sentences containing the words and word-combinations listed below and translate these sentences into Ukrainian.
Every human society: ______________________________________________________________
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
the consumer's preferences: _________________________________________________________
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
the factor owners: _________________________________________________________________
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
is based on: ______________________________________________________________________
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
work for a living: _________________________________________________________________
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
to perform their work: _____________________________________________________________
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
makes little or no effort: ____________________________________________________________
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
will sell well: ____________________________________________________________________
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
private ownership: ________________________________________________________________
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
relies on the market: _______________________________________________________________
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
markets as well as government decisions: ______________________________________________
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Exercise 8. Choose from the box the words and word-combinations having the same or similar meaning to the words listed below. More than one is possible.
| 1. бути готовим робити (2) | |
| 2. бути у розпорядженні (2) | |
| 3. власність (3) | |
| 4. втручання (3) | |
| 5. державна власність (2) | |
| 6. дуже важливий (3) | |
| 7. кінцевий споживач (2) | |
| 8. нестача (3) | |
| 9. особиста власність (2) | |
| 10. поєднання (2) | |
| 11. приватна власність (2) | |
| 12. розподіл (2) | |
| 13. розподіляти (2) | |
| 14. споживач (2) | |
| 15. сприяти (3) | |
| 16. стимул (3) | |
| 17. технологія виробництва (2) | |
| 18. установа (2) | |
| 19. частина (2) |
| public ownership | key | a customer | an institution | a participation | |||
| a technology | a dose | property | to encourage | a combination | |||
| private ownership | allocation | a share | an intervention | an organization | |||
| a final consumer | a consumer | a blend | to distribute | to favour | |||
| an encouragement | essential | possessions | a shortage | private property | |||
| an individual property | a lack | a motive | distribution | to be willing | |||
| an interference | crucial | a deficit | to be ready | to be available | |||
| personal property | to stimulate | to allocate | state property | an incentive | |||
| an ultimate customer | to be at one's disposal | a production method | ownership | ||||
Exercise 9. Translate the words in brackets into Ukrainian.
Every economy has limited resources (у своєму розпорядженні) to meet (необмежені людські бажання). So the (проблема вибору) arising out of (нестачу ресурсів) faces every economy. All societies have to decide what they (готові відмовитися) to get the things they want. It is the task of an economic system to (ефективно поєднати своїї ресурси), wants and (технології виробництва). To do so, it must answer (три основні та взаємозалежні економічні питання): What to produce, How to produce, and For Whom to produce with its limited resources.
Not all societies choose to answer these questions in the same way, however, (кожне суспільство намагається) to answer them (еффективно). The economic system a country has (грунтується на) what is best for the country. The way each question is answered identifies (тип економічної системи) that exists (у певному суспільстві). (Загалом існує) three kinds of economic systems (у світі). They are: traditional, command, and market economies.
вирішує (У традиційній економіці), the custom or tradition of the society (надає відповіді на) the What, How, and Who questions.
(У суспільстві з командною економікою) it is (урядові установи) that (приймають рішення) which products will be made, they decide where (розташувати новий завод) and what factory to modernize. By setting wage rates for everyone, (центральна влада вирішує) who will receive (вироблені товари та послуга).
The most widely accepted economic system today is (ринкова економіка). In this type of economy it is (діяльність та рішення) of the buyers and sellers of goods, services and resources that (керують економічною системою).
Since there are no (як чистих командних, так і чистих ринкових економік), it is perhaps better to describe (більшісь сучасних економік) as (змішані економіки), in which (як уряд, так і приватні особи) have their economic (вплив на ринок) effect on the marketplace.
Exercise 10. On the left of the page there are the first halves of sentences. The second halves of the sentences are on the right, though not in the same order. Pair the halves and then write your own list of the completed sentences. Translate into Ukrainian.
| 1. Since there will not be enough produced to meet everybody's wants, | a. as its economic system. |
| 2. The central problem of economics is | b. in accordance with the laws of supply and demand. |
| 3. The market system and the ownership of wealth are | c. to make the most productive use of their means of production |
| 4. In command economies the major means of production are | d. some way will have to be chosen to determine how the output is distributed. |
| 5. Private property provides people with the incentive | e. to obtain the greatest profits at the lowest possible cost. |
| 6. A market, or free enterprise system, as it is sometimes called, is | f. to determine the most efficient ways of allocating the factors of production and solving the problem of scarcity. |
| 7. Private property and the profit motive are | g. privately owned. |
| 8. The profit motive encourages people | h. the key elements in determining who will be rich, middle or poor. |
| 9. In market economies the major means of production are | i. one in which the decisions of many individual buyers and sellers interact to determine the answers to the questions of What, How and Who. |
| 10. The way in which a society provides answers to the What, How and Who questions is known | j. essential elements in a market economy. |
| 11. Resources in a market economy are allocated | k. usually publicly owned. |
| Completed sentences | Translation |
| ____________________________________________________________________________________________________________________________________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ ______________________________________________________________________________ _______________________________________ _______________________________________ ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ | _______________________________________ _________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ _________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ |
Exercise 11. Match each term in column A with its definition in column B.
| A | B |
| 1. Command economy | a. An organized way of providing answers to the fundamental economic questions of What, How and Who. |
| 2. Economic system | b. The natural desire of every entrepreneur to make as much profit as possible. |
| 3. Free enterprise system | c. A type of economic system in which the activities of firms and the allocation of productive resources are determined by government direction rather than the market forces. |
| 4. Market economy | d. An economic system in which the decisions concerning the productive resources allocation are based on tradition and custom. |
| 5. Mixed economy | e. A form of organization of the economy in which decisions on resources allocation are left to the independent decisions of individual buyers and sellers acting in their own best interest without central direction. |
| 6. Private property | f. A form of organization of the economy in which some goods and services are produced by the government and some by private enterprises. |
| 7. Profit motive | g. One of the essential elements in a market economy that gives each individual the right to own, use and dispose of things of value. |
| 8. Traditional economy | h. An economic system characterized by private ownership of property and productive resources, the profit motive to stimulate production, competition to ensure efficiency, and the forces of supply and demand to direct the production and distribution of goods and services. |
1. and economy
Exercise 12. Correct the following statement if you find them wrong. Make sure you begin your answers with such commonly accepted phrases as:
Ø I quite agree with smb/smth.
Ø Yes, that's quite right.
Ø I don't think that's quite right.
Ø I am afraid I don't/can't agree with smb/ smth.
Ø I'm afraid that's completely wrong.
Ø That's not quite right/true.
Ø I wouldn't say so.
Ø Oh, no, quite on the contrary.
Ø As far as I remember…
1. There is no need for a society to resolve three fundamental and interdependent economic questions.
2. The reason every society provides answers to the fundamental economic questions is that there is enough of everything to go around.
3. All countries in the world have just the same approaches to address the basic economic questions.
4. Most economic systems function as command economies.
5. The advantage that a society with a traditional economy has over other systems is that people benefit from their extra work and raise their standard of living.
6. In answering the basic economic questions a free market economy relies on decisions made by government
7. Command economies combine market-type systems with some degree of government intervention.
8. In a mixed economy the means of production are privately owned and all national economic decisions are the result of decisions of individual buyers and sellers in the market place.
Exercise 13. Translate the sentences into English using the active vocabulary.
| 1. Проблема нестачі ресурсів стосується проблеми розподілу ресурсів. 2. Кожне суспільство вибирає свій особистий шлях надання відповіді на основні економічні питання Що, Як і для Кого виробляти. 3. У суспільстві з традиційною економікою більшість людей не вільні приймати рішення, які грунтуються на тому, що вони хочуть або що хотіли б мати. 4. В деяких сучасних суспільствах уряд відіграє значу роль у відповідях на основні питання що, як і хто. 5. Командна економіка – це така, в якій уряд приймає усі рішення щодо виробництва та розподілу багатства країни 6. В ринковій економіці основні засоби виробництва знаходяться у приватній власності. 7. Не існує ринкових економік без втручання уряду в деякі економічні проблеми. 8. Ринкова система надає окремим лю-дям та торгівельно-промисловим підпри-ємствам стимул виробляти речі, які хочуть покупці та за ціною, яку вони готові заплатити. 9. Велика кількість незалежних покупців і продавців, приватна власність та мотив прибутковості – найважливіші складові ринкової економіки. 10. Усі сучасні суспільства – це суспіль-ства зі змішаними економіками, що поєднують елементи ринкової та командної економік. 11. У змішаних економіках рішення що виробляти, як його виробляти і для кого приймаються як ринком, так і урядом. | ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ |
Exercise 14. Answer the following questions.
1. What are the three basic economic questions that every society must answers?
2. What makes each society look for the answers to the basic economic questions?
3. Why must individuals and societies provide answers to the basic economic questions?
4. How does each society make its decisions to solve the problem of scarcity?
5. What does the What question refer to?
6. What are the ways of providing answer to the How question?
7. What does the Who question mean?
8. What is an economic system?
9. What determines the type of an economic system?
10. What categories do economic systems fall into?
11. What is a traditional economy?
12. How are the answers to What, How and Who questions decided in a society with a traditional economy?
13. Why are there few social changes within a traditional economy?
14. What is a command economy?
15. Who makes decisions on the fundamental economic questions in a society with a command economy?
16. Who owns the major means of production in a command economy?
17. Why do the individuals have very little say as to how the basic economic questions are answered.
18. What is a market economy?
19. How is sometimes a market economy called?
20. What is a free enterprise system?
21. What is a free enterprise system based on?
22. Who owns the means of production in a society with a market economy?
23. How are the basic questions decided in a market economy?
24. What role do buyers and sellers play in a market economy?
25. What is private property?
26. What role does private property play in a market economy?
27. What is the profit motive?
28. What is the main incentive of a free enterprise, or market, economy?
29. How do the individuals benefit from a market economy?
30. What is a mixed economy?
31. Why are there neither pure market economies nor pure command economies?
32. Why are economic systems of most democratic countries called mixed economies?
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