Grammar

Task 1. Write the plurals of the following nouns.

Study, resource, price, wealth, tool, employer, consumption, goal, ef­fort, money, skill, factory, life, society, way, place, service, firm, idea, busi­ness, owner.

Task 2. Open the brackets and put the verb to be into the correct form.

1. Economics (am, is, are) the scientific study of the way in which wealth (am, is, are) produced and used.

2. The range of problems considered by economists (am, is, are) rela­tively narrow.

3. Natural Resources or "Land" (am, is, are) the things provided by na­ture that go into production of goods and services.

4. A factory, tools and machines (am, is, are) capital resources.

5. I (am, is, are) an entrepreneur.

6. The money that remains after the owners of land, labour and capital have received their payments (am, is, are) the reward to entrepreneurs for the risks, new ideas and efforts that they have put into the business.

Task 3. Make the sentences negative to make them true.

1. Economics normally includes such things as personal finance, per­sonal income, ways to start a small business, etc.

2. Capital goods are the finished products - the goods and services that consumers buy.

3. When they are successful, entrepreneurs suffer losses.

4. Natural Resources include such things as factories, tools and ma­chines.

5. Scarcity is created by limited wants of society and unlimited resources.

Lesson II

Introduction to microeconomics

For centuries philosophers have tried to answer the question "How is it best to arrange an economy to provide the most favourable society?" Adam Smith examined this question in his book "The Wealth of Nations" and found some answers. One of the most famous passages says that in a competitive market when each person seeks to better his own position the result is the improvement of all the society. Smith said this worked like an invisible hand.

Today the industrial revolution which Smith was watching is part of our history. Countries are larger and technologies are much more advanced. Still we ask the same question "How is it best to ar­range an economy to provide the most favourable society?" First, we must define "most favourable". Goals of macroeconomics include: economic growth, full employment, economic efficiency, price stability, economic freedom, fair income distribution, economic security and favourable balance of trade.

Each society must decide for itself which of these possible goals is the most important, because it is not possible to achieve all at the same time. Leaders in all nations set priorities and establish policies and laws that they hope will accomplish their most important goals.

How does microeconomics contribute to the discussion? First, under­standing microeconomics can allow decision makers to act wisely because they will be able to accurately predict the logical consequences of their ac­tions.

Second, understanding microeconomics can allow individuals to act wisely in their own positions in business and in their own personal decisions because they, too, will be able to accurately predict the logical consequences of the actions of their leaders. Once the policies and laws have been estab­lished, individuals make their decisions. Individuals will always seek to create the best possible life for themselves, for their families and for others whom they love. Sometimes it is said that this is selfish and that it precludes generosity. This is not true. For most of us helping others is part of being happy. It is part of the best possible life.

Microeconomics examines how individuals act. We examine individual consumers and combine their actions to determine market demand for any good or service. We examine individual producers and combine their actions to determine market supply for any product or service. Once we have ex­amined, each of these topics in detail, you will see how logical economics is, and how useful it is in everyday life.