ENGLISH FOR ECONOMISTS

The capital which people provide to help new businesses is an accumulation of previous surpluses on previous business activities. In this way the past is used to finance the future. Such capital is accumulated by a deliberate policy of saving surpluses. This policy may be personal and individual, or it may be public and collective. As such, it is common both to capitalistic and socialist systems. In both systems, a certain part of the profits is “ploughed back” into the system in order to create capital.

In general terms, capital can be defined as 1) a factor of production (for example machinery or cash); 2) the assets possessed by a person, a company or a nation. Land, houses and shares in a business are capital. In terms of the state, all railways, docks, roads, airports and state funds of money are part of the nation’s capital.

EX.1. Answer these questions:

1. What is profit?

2. At what point does an employer obtain his surplus?

3. Who may be required to share it with?

4. What do most businesses need?

5. Why is there always an element of risk in providing capital?

6. Who bears the risk?

7. How is the past used to finance the future?

8. What do people “plough back” into the system?

9. Why is it ploughed back?

10. What examples of private capital are given?

11. What examples of public capital are given?

EX.2. Say whether these statements are true or false, and if they are false say why.

1. Labour is work performed by an employer at a negotiated rate.

2. The expenses of a business are part of its surplus.

3. Usually new businesses need capital.

4. Because businesses may not always be successful, there is always some risk involved financing them.

5. Employers and employees share the risk of financing new enterprises.

6. The surpluses which people provide to help new businesses arise from previous economic activities.

7. A nation’s capital in economic terms is the city where the government is situated.

EX.3. Combine these pairs of sentences by using “who”, following either first or second example.

EXAMPLE1. He may be required to share the surplus with others. The others provide the capital. He may be required to share the surplus with others who provide the capital.

EXAMPLE2. The manager will begin work next month. The manager was appointed last week. The manager who was appointed last week will begin work next month.

1. He may wish to discuss the scheme with others. The others have been interested in it for some time.

2. The government appointed a special commission of industrial experts. These experts would meet regularly to plan production targets.

3. Those employees were satisfied with the working conditions. The employees were engaged on two-year contracts.

4. Those employees were not satisfied with the working conditions. The employees were engaged on a day-to-day basis.

5. The bank decided to provide capital for the farmers. The farmers were interested in increasing their productivity.

6. The official investigator decided that the management was not efficient. The investigator was sent by the government to inspect the factory.

7. The trade unions represent the majority of those workers. The workers earn fixed wages.

8. The owners of the factory needed a manager. The manager would be concerned not only with efficiency in production but also with good relations between employers and employees.

9. The central planning authorities discussed changes in policy. The authorities were concerned with a drop in production.

EX.3. Punctuate the following passage. Provide capital letters, commas, full stops, etc. where appropriate.

There must always be people willing to bear the risks of new business undertakings in addition to simple risk bearing however it is necessary to have people who will control and coordinate the various factors of production such people should decide the nature the quantity the quality add the distribution of new products as well as bearing the risk of successes or failure economists call the person who undertakes these functions as entrepreneur this term is French and means one who undertakes something.

EX.4. Make compound words by altering these sentences. EXAMPLE. He is not interested in bearing risks. He is not interested in risk-bearing.

1. He is not interested in owing a house.

2. He is not interested in making profits.

3. The company has decided on a policy of sharing profits.

4. The business of raising capital is something difficult.

5. The problem of making good policies is part of politics.

EX.5. Find single words in the text for which these words could be substituted.

Done, goods, gets, given, carry, made worthwhile, building-up, earlier.

UNIT 8. MARKETS AND MONOPOLIES. TEXT A.

The term “market”, as used by economists, is an extension of the ancient idea of a market as a place where people gather to buy and sell goods. In former days part of a town was kept as the market or marketplace, and people would travel many kilometers on special market-days in order to buy and sell various commodities. Today, however, markets such as the world sugar market, the gold market and the cotton market do not need to have any fixed geographical location. Such a market is simply a set of conditions permitting buyers and sellers to work together.

In a free market, competition takes place among sellers of the same commodity, and among those who wish to buy that commodity. Such competition influences the prices prevailing in the market. Prices inevitably fluctuate, and such fluctuations are also affected by current supply and demand.

Whenever people who are willing to sell a commodity contact people who are willing to buy it, a market for that commodity is created. Buyers and sellers may meet in person, or they may communicate in some other way: by letter, by telephone or through their agents. In a perfect market, communications are easy, buyers and sellers are numerous and competition is completely free. In a perfect market there can be only one price for any given commodity: the lowest price which sellers will accept and the highest price which consumers will pay. There are, however, no really perfect markets, and each commodity market is subject to special conditions. It can be said however that the price ruling in a market indicates the point where supply and demand meet.

EX.1. Answer these questions:

1. What was a market originally?

2. What is a modern market?

3. Among whom does the competition take place?

4. What does the competition influence?

5. What three things cause prices to fluctuate?

6. When is a market created?

7. What three means are mentioned by which buyers and sellers can communicate if they do not meet in person?

8. What price operates in a perfect market?

9. What does the ruling price indicate?

EX.2. Say whether these statements are true or false, and if they are false say why.

1. The ancient idea of a geographically fixed market-place has been extended to cover sets of conditions which permit buyers and sellers to work together.

2. The world cotton market is not located in any special place.

3. The competition between buyers of a commodity influences the prevailing prices.

4. Supply and demand inevitably affect prevailing prices.

5. A market for a commodity is created whenever buyers and sellers meet in person but not when they work through their agents.

6. Competition in a perfect market is conducted in a completely free way by numerous buyers and sellers enjoying easy communications.

7. The lowest price which buyers will offer is the only price in a perfect market.

8. Each commodity market is imperfect in some special way.

EX.3. Combine these pairs of sentences by using “as” and by making the second sentence passive. Two answers are required.

EXAMPLE. The term “market” is an extension of the ancient idea of the market-place. Economists use the term in a special way.

1. The term “market”, as the term is used by economists, is an extension of the ancient idea of the market-place.

2. The term “market”, as used by economists, is an extension of the ancient idea of the market-place.

1. The term “labour” means any work done for a known reward. Economists use the term in a special way.

2. The term “money” refers not only to a means of exchange but also to a means of measuring the value of men’s labour. Economists understand the term in a special way.

3. The idea of a perfect market is a theoretical concept and not a practical reality. Economists present the idea in a special way.

4. The methods of controlling prices and wages will probably not succeed. The government described the method in a special way.

5. The scheme for a new industrial complex will take fifteen years to complete. The planners discussed the scheme at the meeting in a special way.

EX.4. Arrange these sentences in their proper sequence in order to obtain a paragraph on durable goods.

1. Finally, it is interesting to note that many buyers and sellers on important markets never see the commodities which they buy and sell.

2. Commodities like these can be bought and sold and stored without difficulty by people who live at great distances from each other and form sources of supply.

3. Certain commodities have a wider market than others.

4. In addition, commodities which are easy to transport, safe to handle and simple to grade are generally in universal demand.

5. Durable goods, for example, have a far wider market than perishable goods.

6. For this reason such goods are good commercial proposition because the risk of investing in them is relatively low.

EX.5. Fill in the blanks with the different forms of the word “vary”: variable, varied, various, variety, variation.

1. Conditions on that market are stable and do not ….. very much from year to year.

2. That businessmen handles a very …. Selection of products, including bananas, toys, and cars.

3. The managers of that company hope to increase the …. of products which they offer for sale to the public.

4. There has bee little ….. in price levels over the last five years.

5. Because prices on that market fluctuate considerably from week to week, we say that they are ….

UNIT 8. MARKETS AND MONOPOLIES. TEXT B.

Although in a perfect market competition is unrestricted and sellers are numerous, free competition and large numbers of sellers are not always available in the real world. In some markets there may only be one seller or a very limited number of sellers. Such a situation is called “monopoly”, and may arise from a variety of different clauses. It is possible to distinguish in practice four kinds of monopoly.

State planning and central control of the economy often mean that a state government has the monopoly of important goods and services. Some countries have state monopolies in basic commodities like steel and transport, while other countries have in such comparatively unimportant commodities as like steel and transport, while other countries have monopolies in such comparatively unimportant commodities as matches. Most national authorities monopolize the postal services within their borders.

A different kind of monopoly arises when a country, through geographical and geological circumstances, has control over major natural resources or important services, as for example with Canadian nickel and the Egyptian ownership of the Suez Canal. Such monopolies can be called natural monopolies.

They are very different from legal monopolies, where the law of a country permits certain producers, authors and inventors a full monopoly over the sale of their own products.

These three types of monopoly are distinct from the sole trading opportunities which take place because certain communities have obtained complete control over particular commodities. This action is often called “cornering the market” and is illegal in many countries. In the USA anti-trust laws operate to restrict such activities, While in Britain the Monopolies Commission examines all special arrangements and mergers which might lead to undesirable monopolies.

EX.1. Answer these questions:

1. What is not always available in the real world?

2. What is monopoly?

3. What are the first three kinds of monopoly?

4. What examples of important state monopolies are given?

5. What are Canadian nickel and the Suez Canal examples of?

6. What are certain inventors permitted by law to have?

7. What word in the last paragraph shows that the fourth type of monopoly is quite distinct from the other three?

8. What happens when certain companies obtain complete control over particular commodities?

9. What do the Americans call their anti-monopoly laws?

10. What does Britain use to restrict special arrangements?

EX.2. Say whether these statements are true or false, and if they are false say why.

1. “Monopoly” describes a market in which there is only one seller or a very limited number of sellers.

2. In theory there are four kinds of monopoly.

3. States always monopolize important basic commodities.

4. Egyptian nickel is a good example of a natural monopoly.

5. Cornering market is quite legal in the USA.

6. The Monopolies Commissions consider that it is undesirable to restrict business mergers.

EX.3. Paraphrase the two sentences into a one.

1. In some countries there are both private and public sectors. An economic system like this is known as a mixed economy.

2. In most markets it is not necessary for buyers and sellers to meet in particular locations. Markets like these are quite different from the market-places of ancient towns.

3. For some people investment in new business enterprises is not too great a risk. People like these sometimes make considerable profits but on other occasions can lose much of their capital.

EX.4. Punctuate the following passage. Provide capital letters, commas, full stops, etc. where appropriate.

Monopolies and similar arrangements may be referred in Britain to the monopolies commission between 1948 and 1966 the commission presented some twenty six reports the government in 1965 passed a special called the monopolies and mergers act which reorganized enlarged the monopolies commission it provides for the investigation of services and mergers especially newspaper mergers and improves and extends the government powers for taking action the action of the government is based on the monopolies commission reports.

EX.5. Find single words in the text for which these words could be substituted.

Many, restricted, condition, separate out, essential, relatively, frontiers, type, allows, categories, commercial, unlawful, limit, studies, unions.

UNIT 9. THE OPEN MARKET.

In addition to being a means of exchange, money is also a means of measuring the value of men’s value. Labour, in economic theory, is any work undertaken in return for a fixed payment. A mother may work very hard in caring for her children, but she receives no fixed wages for this work. It is not therefore labour in the strict economic sense. Economists are interested in measuring the services which people render to each other. Although aware of the services which people provide for nothing, they are not concerned with such services. In economics money is the standard by which the value of the thing is judged. This is an objective, scientific standard and not in any way related to standards of a religious, ethical or subjective nature.

Hunan labour produces both goods and services. The activities of a farm worker and a nurse are very different, but each is immeasurable in terms of payment received. If however a farmer is self employed and does not receive a fixed wage from anyone else, he is in different category from the nurse and from his own farm workers. His activities are not only labour. His workers receive their wages, but he receives whatever surplus (large or small), emerges from his farming. This surplus, like any surplus in industry or commerce, is what we usually call “profit”

Employers obtain their net profit only after they have paid all expenses arising out of their business activities: interest, rentals, payments for machinery, wages, and overheads generally. This surplus is not usually available only for employers and their families. Normally part of it goes to those who have provided the initial capital needed to start a business. There is always an element of risk in providing capital for new businesses. Such businesses may fail. Both those who provide the capital and those who run the businesses agree to bear the risk, but employees of such businesses are not expected to bear any risk. If the business is successful, the risk-taking has been justified, and invested capital earns part of the profits as a return on the investment and the period during which the capital was at risk.

Capital in this instance is simply the accumulation of previous surpluses on previous business activities. In this way the past is used to finance the future. The accumulation of capital is almost always deliberate, either on the part of individual citizens or on the part of the state. Even in non-capitalistic societies a certain part of this surplus achieved in any enterprise is “ploughed back” into the system in order to promote further growth.

When capital, labour and enterprise combine to make a new business successful, the business must still continue to compete on the market with other companies producing the same type of commodity. The term “market”, as used by economists, is a logical extension from the idea of a place set aside for buying and selling. Formerly, part of a town was kept as a market place, and country people would come in on market days to buy and sell. Markets today need not however be located at any fixed place: the sugar market and the cotton market are not geographical locations, but simply set of conditions which permit buyers and sellers to work together.

In a free market, competition takes place among sellers in order to sell their commodities at the best possible price and among buyers in order to obtain what they want at a price which suits them. Such competition influences prices. Changes in supply and demand have their effects, and it is not surprising that considerable fluctuations in price can take place over periods of weeks and months.

Since these modern markets are not normally located in any special place, buyers and sellers do not always have to meet face-to-face. They may communicate by letter, by mail, by telephone or through their agents. In a perfect market, such communications are easy, buyers and sellers are numerous, and competition is completely unimpeded. In a perfect market there can be only one price for any given commodity: the lowest price the sellers will accept. There are, however, no really perfect markets, because each market is subject to its own peculiar conditions. It can be said however that the price ruling in a market indicates the point where supply and demand meet.

Monopoly is one of the peculiar factors which can affect the sale and purchase of certain commodities. In some markets, there may y be only one seller or a cartel of sellers working very closely together to control prices. The result of such monopolistic activity is to fix prices at a level suitable to the seller, a level which may bring him artificially high profits. Many governments dislike this procedure and have taken action to restrict or halt any business activities directed towards “cornering the market». In the USA, anti-trust laws operate to limit cartels and mergers, while in Britain the Monopolies Commission examines all special arrangements and mergers referred to them by the Board of Trade which appear to operate against the public interest.

This type of monopoly is not the only possibility, however. There are three other forms: state, legal, and natural. State monopolies are quite common nowadays, where the authorities in a particular country control industries like steel and transport or important and prestigious services like national airlines. Legal monopolies are rather different, because the law permits certain individuals to benefit solely from their special inventions, discoveries or processes. No other person may infringe their rights to in respect to such monopolies. Finally, natural monopoly arises where a nation or individual possesses most of a particular mineral for reasons of geography and geology. Canadian nickel and South African gold are two well-known examples of this kind of monopoly.

EX.1. Say whether these statements are true or false, and if they are false say why.

1. The money standard used by economists is essentially an ethical standard.

2. Employees enjoy the surplus in industry that we usually call “profits”

3. The future is often financed by the past.

4. Although the term “market” originally referred to a fixed locality, today it needs not to do so.

5. The four types of monopoly are not possible in a perfect market.

EX.2. Combine these pairs of sentences by using “only after”. The meaning is the same in both new forms, but the emphasis is different.

EXAMPLE. Employers obtain their surpluses. They have paid all their debts.

1. Employers obtain their surpluses only after they have paid all their debts.

2. Only after they have paid all their debts do employers obtain their surpluses.

1. Most manufactures of everyday goods begin to make a profit. They have been in business for some time.

2. Sellers decide to lower their prices. They see that buyers are prepared to go to other groups whose products are cheaper.

3. Undesirable merges stop occurring. The authorities pass anti-trust laws.

4. New businesses operate successfully. Investors have provided sufficient capital to help them to get underway.

5. Some governments change their basic policy. They find that practical problems of government are different from theoretical politics.

EX.3. Each of these sections is part of a text about money, labour and markets. Punctuate the sections, and then arrange them in their proper order.

1. although they are no longer located in fixed places modern markets are still an extension of the old idea of a market place in a town

2. money is a means of measuring labour we can define labour as any work undertaken for an agreed payment

3. competition supply and demand all influence market prices and make them fluctuate

4. a self employed person does not perform labour although his employees do so he receives the profits on his business activities

5. the exception to this situation however is the monopoly which is a special condition in which a single seller or a small group of sellers controls the market

6. the profits of a company are usually shared among the investors the profits are therefore a return on invested capital

7. this capital is simply the accumulated surpluses of the past used to finance the business activities of the future

8. buyers and sellers may do business without ever meeting each other the price they accept is the point where supply and demand meet

EX.4. Each of the adjectives listed below is derived from a noun. Find the nouns from which these adjectives are derived, and then use them in the appropriate blanks in the sentences.

EXAMPLE. Objective, adj – object,n.

Subjective, scientific, industrial, monopolistic, productive, successful, geographical, prestigious, natural.

1. Coal-mining is a major ….

2. Economics is a …..

3. The government has a …. of the sale of sugar, because no one else is permitted to sell it.

4. The new ….. is a special kind of soap powder.

5. The factory has been a great success and its productivity is among the highest in the areas.

6. National airlines usually have considerable ….. and people are often proud to be associated with them.

7. The …. of the area suggests that building a new airport would be a difficult undertaking.

8. The …. of the commodity makes it difficult to prevent the formation of monopolies.

9. The …. of the discussion was the number of new employees to be engaged during the next year.

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