3. Factor of production

The reason people cannot satisfy all their wants and needs is the scarcity(нестача) of productive resources.Resources are basic elements used to produce goods and services. The factors are natural, capital, human resources and entrepreneurship.

1)Natural resources or land. .. As an economic term land means the gifts of nature or natural resources not created by human efforts. They are the things provided by nature that go into the creation of goods and services. Land has a broad meaning. It includes deserts, fertile fields, forests, mineral deposits, rainfall, sunshine and the climate necessary to grow crops.

2 The second factor of production is labour – people with all their efforts and abilities) Mental efforts consists of the individual knowledge, talents of people.

3)There are 2 kinds of capital:financial- money and physical. Physical resources are factories, tools, buildings, equipment, machines, etc.

4)Entrepreneurship is the skill of combining the other factors of production. is the imagination, innovative thinking, management and organization skills which are needed to start a business.

5.Types of Economic System

An economic system is the way in which a society uses its available scarce resources to satisfy its citizens needs. Economists distinguish(розрізняють) between three main economic systems: planned, market and mixed. Planned economy is sometimes called ‘command’ economy Planned economy involves(включає) central planning and direction(керівництво), when the government takes all decisions concerning(щодо) production and consumption. There is no state which is completely a command economy; the actual system varies(варіює) from state to state.

Market economy is the system based on private enterprise with private ownership of the means of production and private supplies of capital(приватних джерел капіталу). The government plays no role in the management of the economy. In a market economy it is the consumers who decide what is to be produced. Private entrepreneurs accept the risks of introducing new products

In practice most countries have what is called a mixed economy system – a combination of free markets plus government allocation(розподілом) of resources. Mixed economy contains elements of both Market economy and Planned economy. In a mixed economy the government and the private sector interact(взаємодіє) in solving(вирішенні) economic problems. The state controls the output(виробництвом) through taxation and intervenes(втручання) to supply essential(істотних) goods and services such as health(охорона здоровя), education and defense(оборону), while private businesses provide(забезпечує) consumers with a wide range(діапазоном) of different products and services.

6. Fundamental economic concepts and question

Many of the world’s most pressing(актуальні) problems are economic in nature. The subject(предметом) matter(питання) of economics is society itself. But economics is concerned(пов’язана) with studying those aspects of human society which are to do with the production and consumption of goods and services, wages and earnings, unemployment, inflation, government spending, taxation and regulation, international trade(між народ торг), and the distribution of material wealth in the country and throughout the world.

All economic questions arise from the fundamental fact of scarcity. Nature does not provide all of the things society wants. We must decide what, how and for whom to produce. The ability of producers to provide goods and services to individuals at various(варіюючій) prices is broadly(широко) covered(висвітлюється) by the concept of supply. The desire(бажання) by individuals to consume goods and services at various prices is broadly covered(висвітленно) by the concept of demand. Thus, all areas of study in economics can be classified into those under the heading(керуються) of supply, those under the heading of demand, and those based on interrelationships between supply and demand.

There are two sides to the study of economics: microeconomics and macroeconomics. Microeconomics is concerned(повязана) with individual products and decisions made by individual firms and consumers. Macroeconomics is concerned with the function of the overall economy.