1. Ex.4. Read the description and draw a circular flow.

Start with the two blocks. The one on the left should be labeled "households", and the one on the right "firms". On the top of the inner loop, circle, put "goods and services", with an arrow running from the firms block to the households block. At the bottom of the inner loop put "services of productive factors", with an arrow running from households to firms. On the outer loop, at the top, put "spending on goods and services", with an arrow running from households to firms. And finally, at the bottom of the outer loop, put "factor incomes", with an arrow running from firms to households.

19. Ex.5. Thought and discussion questions.

1. Why do you suppose the “basic economic problems” exist?

2. Do you feel people are too greedy or are there just too few resources?

3. What is the opportunity cost for you to complete the assignment you are now working on?

4. How is the price of a good or service determined in the market?

Ex.6. Case study: Big city trade – choosing less to get more.

When Peat Marwick, Mobile Oil, Trans World Airlines, and Dolomite decided to move their headquarters from New York City, they didn’t make their decisions lightly. These companies are moving to decrease commuting time of employees and to get away from the crime, blight, and high rents of the city.

But what are companies giving up to move out of a city like New York City? City officials and real estate people point out that a Manhattan location provides ready access to suppliers, customers, and service. Further, because Manhattan is the heart of one of the world’s largest transportation, financial, and communication hubs, it offers many other benefits as well.

Companies also have to keep in mind that a move of any distance will cause employees to make a major decision. When J.C.Penney moved from New York City to Plano, Texas, employees either had to relocate or find another job. Some employees might not have been eager to relocate because this meant they had to leave family and friends. Others have spouses who might not have wanted to leave their jobs and children who might have had difficulty changing schools. This means that companies such as Penny’s have to hire new employees to staff their ranks when they arrive in the new location.

The cost of relocating employees can be a major expense for both to the company and the employee.

1. What are the advantages (disadvantages) of living in a city such as New York City?

2. What are advantages (disadvantages) of relocating to another location from New York City?

3. What is opportunity cost of staying in New York City? Of relocating?

Срсп 11 markets Markets

During earlier periods of history, a market was a place where buyers and sellers actually met to exchange their goods and services. Farmers came to town and set up stalls to display their produce. Townspeople would then come and buy the produce directly from the farmers. Some communities in the United States still have”farmers” markets which operate in much the same way today. However, most goods and services are no longer exchanged in this way.

The term market now refers to more that a physical location. Now a market is considered to be any system or arrangement that enables buyers and sellers to negotiate prices and exchange goods and services. We buy and sell goods, and services through letters, newspapers, telephone, TV, and computer networks as well as personal relationships and face-to-face discussions. Further, the original producer and the final consumer of the good may not deal with one another directly. Instead, there are many people or businesses that perform specialized functions that help move goods from producer to consumer. For example, most farmers sell their vegetables or fruit to wholesalers who package or process the produce and transport it to grocery stores. Consumers then buy the produce from the grocery store.

Market isn’t limited to the exchange of goods. They are also used to exchange labor, services, property, and even money. If you answer a newspaper ad for a part-time job, you are taking advantage of the labor market. The employer is the buyer who needs workers, and you are the seller of your labor to the employer.

Ex.1. Make a conversation with your friend, using the following statements. Work in pairs. Change your roles.

1. More than two-thirds of population is employed in agriculture.

2. Great Britain imports raw materials from other countries.

3. Before men invented money they used to trade by exchanging goods.

4. Automation helps to do away with unemployment in the USA.

Ex.2. Give explanations in English.

To exchange goods and services, to display one’s produce, townspeople, enables buyers, to negotiate prices, newspaper ad, and property.

Ex.3. Express agreement or disagreement.

1. A market was a place where buyers and sellers actually met to display their goods and services.

2. Farmers came to town and set up stalls to demonstrate their skills and their produce.

3. Some communities in the United States still have”farmers” markets which operate in much the same way today.

4. We buy and sell goods, and services through letters, newspapers, telephone, TV, and computer networks as well as personal relationships and face-to-face discussions.

5. Now a market is considered to be any system or arrangement that enables buyers and sellers to increase prices and exchange goods and services.

6. Consumers then order the produce from the grocery store.

Ex.4. Say something about yourself and the way you are going to study economics.

What branch of economy you have a special liking for?

Ex.5. Thought and discussion questions.

1. The most important question to be answered by an economic system is the distribution question. Who gets the goods and services that are produced? Do you agree or disagree with this statement? Why?

2. Although Americans feel our market economy is the best, very few other nations have an economy as heavily market-influenced as ours. In fact most countries have some type of command economy. Why do you think this true? Why haven’t more countries changed their economy to be like ours since it is generally agreed that ours has been very successful?

3. Some people say that we do not really have “free” enterprise in our economy. Do you consider yourself free to prepare for a career and earn a living in any way you wish in our economy? Why do you feel as you do? Do you agree that this is part of free enterprise? Why?

Ex.6. Write an essay on one of these topics using the material of English or Russian sources.

1. The major feature of our economic system

2. Growing production and clusters.

3. Market schema and conditions.