F. Economics deals with the problems of income, employment, and interest rates.
G. Economics also deals with weather forecasting, psychology and fantasy writing.
H. In recent years economists switched to the new fields, such as political science and sociology.
outstanding people thought of economics and economists:
a) George Bernard Show
b) Alfred Marshall
c) Lionel Robbins
3. What is the profession of people who work in the field of:
(example): Those working in the field of economics are economists.
a) physics
b) astronomy
c) meteorology
d) psychology
e) astronomy
f) meteorology
g) sociology
h) mathematics
Текст №12
Microeconomics
The word «micro» means small, and microeconomics means economics in the small. The optimizing behavior of individual units such as households and firms provides the foundation for microeconomics.
Microeconomists may investigate individual markets or even the economy as a whole, but their analyses are derived from the aggregation of the behavior of individual units. Microeconomic theory is used extensively in many areas of applied economics. For example, it is used in industrial organization, labor economics, international trade, cost-benefit analysis, and many other economic subfields. The tools and analyses of microeconomics provide a common ground, and even a language, for economists interested in a wide range of problems.
At one time there was a sharp distinction in both methodology and subject matter between microeconomics and macroeconomics.
The methodological distinction became somewhat blurred during the 1970s as more and more macro-economic analyses were built upon microeconomic foundations. Nonetheless, major distinctions remain between the two major branches of economics. For example, the microeconomist is interested in the determination of individual prices and relative prices (i.e., exchange ratios between goods), whereas the macro-economist is interested more in the general price level and its change over time.
Optimization plays a key role in microeconomics. The consumer is assumed to maximize utility or satisfaction subject to the constraints imposed by income or income earning power. The producer is assumed to maximize profit or minimize cost subject to the technological constraints under which the firm, operates. Optimization of social welfare sometimes is the criterion for the determination of public policy.
Opportunity cost is an important concept in microeconomics. Many courses of action are valued in terms of what is sacrificed so that they might be undertaken. For example, the opportunity cost of a public project is the value of the additional goods that the private sector would have produced with the resources used for the public project.
Theory of the Consumer
The individual consumer or household is assumed to possess a utility function, which specifies the satisfaction, which is gained from the consumption of alternative bundles of goods. The consumer's income or income-earning power determines which bundles are available to the consumer. The consumer then selects a bundle that gives the highest possible level of utility. With few exceptions, the consumer is treated as a price taker — that is, the consumer is free to choose whatever quantities income allows but has no influence over prevailing market prices. In order to maximize utility the consumer purchases goods so that the subjective rate of substitution for each pair of goods as indicated by the consumer's utility function equals the objective rate of substitution given by the ratio of their market prices. This basic utility-maximization analysis has been modified and expanded in many different ways.
Theory of the Producer
The individual producer or firm is assumed to possess a production function, which specifies the quantity of-output produced as a function of the quantities of the inputs used in production. The producer's revenue equals the quantity of output produced and sold times its price, and the cost to the producer equals the sum of the quantities of inputs purchased and used times their prices. Profit is the difference between revenue and cost. The producer is assumed to maximize profits subject to the technology given by the production function. Profit maximization requires that the producer use each factor to a point at which its marginal contribution to revenue equals its marginal contribution to cost.
Under pure competition, the producer is a price taker who may sell at the going market price whatever has been produced. Under monopoly (one seller) the producer recognizes that price declines as sales are expanded, and under monopsony (one buyer) the producer recognizes that the price paid for an input increases as purchases are increased.
A producer's cost function gives production cost as a function of output level on the assumption that the producer combines inputs to minimize production cost. Profit maximization using revenue and cost functions requires that the producer equate the decrement in revenue from producing one less unit (called marginal revenue) to the corresponding decrement in cost (called marginal cost). Under pure competition, marginal revenue equals price. Consequently, the producer equates marginal cost of production to the going market price.
VOCABULARY
behavior – поведение
to investigate – исследовать
applied economics – прикладная экономика
distinction – отличие
subject – предмет, субъект
matter – вопрос, материал
to blur – затуманивать, размывать
to remain – оставаться
exchange ratio – ставка (соотношение) обмена
optimization – оптимизация
utility – полезность
utility function – функция полезности
satisfaction – удовлетворение
constraints – ограничение
monopsony – монопсония (рынок, на котором выступает лишь один покупатель товара, услуги или ресурса)
opportunity cost – альтернативные издержки
to sacrifice – пожертвовать, приносить в жертву
to undertake – взять на себя
to allow – позволять, разрешать
to influence – влиять
to maximize – максимально увеличивать
revenue – доходы
General understanding:
1. Find equivalents in Russian:
a. optimizing behavior of individual units
b. industrial organization
c. labor economics
d. international trade
e. cost-benefit analysis
f. sharp distinction in both methodology and subject matter
g. subjective rate of substitution
2. Translate into Russian:
A. Microeconomic theory is used extensively in many areas of applied economics.
B. Their analyses are derived from the aggregation of the behavior of individual units.
C. The consumer then selects a bundle that gives the highest possible level of utility.
D. The consumer is free to choose whatever quantities income allows but has no influence over prevailing market prices.
E. The producer equates marginal cost of production to the going market price.
F. The producer recognizes that price declines as sales are expanded.
G. Under pure competition, the producer is a price taker who may sell at the going market price whatever has been produced.
3. Give definition to the following:
a) microeconomics
b) applied economics
c) optimization
d) opportunity action
e) utility maximization
Questions for discussion:
Текст №13
Law of supply
Supply is a fundamental concept in both macro- and microeconomic analysis. In macroeconomic theory, aggregate supply is mainly a function of expected sales to consumers, businesses, and governments. In microanalysis supply is mainly a function of prices and costs of production. A more complex view of the supply curve for a commodity is its relation between quantities forthcoming and the possible current prices of that commodity, its expected future prices, the prices of alternative goods and services, the costs of the producer, and time.
Opportunity Costs
Incorporated in the supply curve of goods and_services are opportunity costs. Economists differ from accountants and from the Internal Revenue Service by including both explicit and implicit costs, or opportunity costs. Implicit costs are mainly business costs for wages, rents, and interest, whereas opportunity costs are the alternative costs of doing something else. A sole proprietor or the owners of businesses should calculate what they forgo in wages, rents, and interest by not working for someone else, or by renting the property they use to others, or by the possibility of converting plant and equipment to alternative investment projects.
The Shape and Position of Supply Curves
In competitive markets the shape, or elasticity of supply, reflects time in the production process, such as the immediate or market period, the short run, and the long run. Elasticity of supply is the relative change in price that induces a relative change in quantity supplied. The supply curve is a line on a diagram where the vertical axis measures price and the horizontal axis is quantity. Usually the coefficient of elasticity is positive, meaning that a rise in price induces an increase in the quantity supplied. In the immediate or market period, a given moment, time is defined as too short to allow for a change in output. The supply curve is vertical, and the coefficient of elasticity is zero.
The short run is defined as a period sufficiently long to permit the producer to increase variable inputs, usually labor and materials, but not long enough to permit changes in plant and equipment. The supply curve in the short run is less inelastic or more elastic than in the immediate period. The long run permits sufficient time for the-producer to increase plant and equipment. The longer the time, the greater the elasticity of supply.
Changes in supply are shifts in the position of supply curves. An increase in supply is a rightward movement of a supply curve, with more of the commodity being offered for sale at each possible price. Conversely, a decrease in supply shifts the supply to the left. An increase in supply can occur because sellers expect lower prices in the future, or, as in the agricultural sector, because of bountiful crops. The reverse is true of a decrease in supply. Over periods of time long enough for production processes to change, improvements in technology and changes in input prices and productivities are the main causes of changes in supply.
VOCABULARY
aggregate supply — совокупное предложение
complex — сложный, комплексный
forthcoming — предстоящий, ожидаемый
opportunity costs - альтернативные издержки
accountant - бухгалтер
explicit — явный, откровенный
implicit - подразумевающийся
to calculate - подсчитывать, вычислять, рассчитывать
for(e)go - предшествовать(по времени или в пространстве)
to convert - обращать, преобразовывать
shape — форма
given moment - данный момент
sufficiently - достаточно, в достаточной мере
to permit - позволять, разрешать
variable - переменный, изменчивый
a variable - переменная
rightward movement — движение вправо
conversely — наоборот
bountiful crops - обильный урожай
General understanding:
1. Which of the following is not true:
A. Supply is a concept of macroeconomics.
B. Economists differ from bookkeepers and tax-gatherers because they include also opportunity costs.
C. The shape of the supply curve provides specialist with the information on elasticity of supply and the reflection of the shareholder.
D. The supply curve is a line on a diagram where the vertical axis measures price and the horizontal axis is quantity.
E. Bountiful crops is a cause of increase in supply,
F. Improvements in technology and changes in input prices and productivities are the main causes of the changes in elastic demand.
2. Find equivalents in Russian:
a) fundamental concept
b) current prices
c) business costs for wages,
d) sole proprietor
e) alternative investment projects.
f) coefficient of elasticity
g) a decrease in supply
h) improvements in technology
3. Find antonyms for the following words. Write
one sentence with each:
a) expected —
b) complex —
c) possible —
d) future —
e) competitive —
4. Find the synonyms of the following:
a) accountant —
b) calculate -
c) permit —
d) expect —
e) complex —
f) opportunity —
g) businessman –
5. Define the following terms in English:
a) aggregate supply
b) opportunity costs
c) sole proprietor
d) elasticity of supply
e) coefficient of elasticity
Questions for discussion:
Текст №14
Channels of marketing
Individual consumers and corporate/organizational buyers are aware that thousands of goods and services are available through a very large number of diverse channel outlets. What they may not be well aware of is the fact that the channel structure, or the set of institutions, agencies, and establishments through which the product must move to get to them, can be amazingly complex.