What do these words refer to in the text?

1) it (§ 1); 2) which (§ 4); 3) its (§ 5); 4) it (§ 6); 5) that (§ 6)

Find the paragraphs of the text dealing with the following concepts.

1) international trade theory; 2) the concept of business economics; 3) the subject and the aims of economics; 4) a market concept; 5) the importance of being informed about the economy.

 

V. Additional Reading

Read the following texts to learn more about the problem under discussion.

Basic Economic Concepts

Economic products command a price and satisfy wants and needs. Economic products include goods and services. A good is a tangible economic product that is useful, relatively scarce, and transferable to others. Examples of goods include books, bicycles, and computers. There are many types of goods. A capital good is a good producers use to make other goods and services, such as a machine in a factory. A consumer good, on the other hand, is intended for final use by consumers rather than businesses. Consumers are the people who use, or consume, goods and services to satisfy their wants and needs.

Goods can be further grouped into two categories: durable and nondurable. A durable good lasts for at least three years when used regularly. Durable goods can include capital goods and consumer goods. A nondurable good is a good that lasts for fewer than three years when used regularly. Food and clothing are examples of nondurable goods.

Unlike a good, a service is an item that cannot be touched. A service is work or labour performed for someone else, such as the work performed by engineers, plumbers, or entertainers.

Some goods and services are more valuable than others. Value describes the monetary worth of a good or service as determined by the market. The paradox of value refers to the contradiction between the high value of some nonessential items and the low value of some essential items. For a good or service to have value, it must be scarce and have utility. Utility is a product’s ability to be useful and to provide satisfaction. People evaluate the utility of a particular good or service differently. When people or nations have a large number of valuable and tangible economic goods, they have wealth.

The exchange of goods and services between consumers and businesses forms a circle. In economics, a market is any meeting place or mechanism that allows buyers and sellers to make an exchange. Individuals begin the circle in factor markets, or markets where the factors of production are bought and sold. There individuals earn income by selling their labour to businesses in the factor market. After individuals receive wages or salaries, they spend it in the product markets, or markets where goods and services are bought and sold. Businesses complete the circle when they use the funds generated by sales to produce more goods and services.

 

VI. Speaking

A. Giving your opinion

Explain how you understand the saying:

The economy is to business as the ocean is to fish.

B. Role play

Prepare for a role play. Read the situation and the roles, and follow the procedure.

The situation

First year students are having their first lecture on economics. The topic of it is “Introduction to Economics”.

The roles

1. Lecturer: Get your students to understand the concept of economics, the importance of studying economics and learning about our economy, the key economic terms referring to the topic of the lecture.

2. Team A: You represent the students who believe that the less ordinary people are informed about the country’s economy and economics as a science, the quieter their life is since the questions related to economics and economy are only economists’ concern and area responsibility.

Ask the lecture questions to clear up the problem. Prepare your arguments.

3. Team B: You represent the students who strongly support the idea that everyone but not only economists should be well informed about economy and economics. Prepare your arguments.

Moreover, make sure about the meaning of some economic terms related to the topic of the lecture.

4. Moderator: You evaluate the performance.

The Procedure

1. Appoint a lecturer.

2. Form two teams for the two roles.

3. The lecturer delivers the lecture.

4. Team A voice their opinions.

5. Team B give arguments against Team A’s opinions.

6. The lecturer answers the students’ questions.

7. Team B ask the lecturer questions related to the difference between such concepts as: economy / economics, economic / economical, microeconomics / macroeconomics, positive economics / normative economics.

8. The lecturer answers the questions and sums up the discussion.

9. The moderator evaluates the participants’ performance.

 

VII. Writing

Write an essay on one of the following topics. Use the ideas and vocabulary from the unit. Try to incorporate the following:

· an introductory paragraph that presents the topic;

· paragraphs (at least two) that develop your arguments with supporting evidence;

· a conclusion that reinforces the position you have taken.

1. Economic analysis is applied throughout the society: in business, finance and government, in the family, health and education, in politics and science.

2. Are you planning to specialize in national or international economics? Why?