Basic Economic Concepts

New vocabulary:

key-terms – основні поняття;

need – потреба;

want – бажання;

demand – попит;

survival – виживання;

to reflect – відображати;

to satisfy – задоволення;

limited resources – обмежені ресурси;

the point is – справа в тому, що…

Economics like any other social science has its own vocabulary. To understand economics, a review of some key terms is necessary: needs, wants and demands.

A need is a basic requirement for survival. People have basic needs such as: food, clothing and shelter. People also have higher level needs, such as communication, love, acceptance, knowledge, hope and accomplishments.

A want is a means of expressing a need. Food, for example, is a basic need related to survival. To satisfy this need a person may “want” a pizza, a hamburger or other favourite food. That is there are any numbers of foods that will satisfy the basic need for food.

The point is that the range of things represented by the terms “want” is much broader than those represented by the term “need”.

Sometimes the difference between a want and a need is clear; at other times it is not.

A basic need is reflected in a want for a particular product. A want cannot be counted in the market-place until it becomes a demand – the willingness and ability to purchase a desired object. Since an individual has limited resources, only some wants will end up as measurable demands.

1) Choose the sentences that correspond to the text. If the sentence is wrong correct it:

1. The key terms of economics are needs and demands.

2. The basic needs are food, clothing and shelter.

3. A need is a means of expressing a want.

4. The range of things represented by the terms “want” is much broader than those represented by the term “need”.

5. The difference between a want and a need is always clear.

6. A demand is willingness and ability to buy a desired subject.

2) Answer the questions to the text:

1. What is a need?

2. What are the basic needs?

3. What higher level needs do you know?

4. What is a want?

5. Is the difference between a want and a need always clear?

6. Can a want be counted in the market place?

7. What is a demand?

The Basic Economic Problem

New vocabulary:

to provide – забезпечувати;

goods – товари;

services – послуги;

distribution – розподіл;

to refer - відноситися;

value - цінність;

available - доступні;

to determine – визначити.

All social scientists are concerned with the study of people. But economists are primarily interested in how people provide themselves with the goods and services they need to survive.

Every human society must solve the economic problem of survival. It must decide how to use its physical environment to satisfy the needs and wants of its members. And no matter how a society uses its resources, the result is an economic system of production and distribution of goods.

In studying a society’s economic system, economists look for three questions: What goods to be produced? How are goods to be produced? and For whom are goods to be produced? The first two questions refer to production of goods; the third to their distribution.

One important factor that helps to determine a society’s answer to the three questions is the culture of the society, or more exactly, the values of its culture. Other factors are the available resources-both natural and human- and the level of the society’s technological knowledge. Thus, in answering the basic economic question, a society usually works out an economic system closely related to its culture. And in so doing, it will determine its overall pattern of economic life, and also the methods used in the production and distribution of goods.