ECONOMICS AS A SCIENCE

Entrepreneurship is an activity that is related to an equity investment in order to profit from a combination of self-interest with the common good.

The main features:

- Autonomy and independence;

- Economic interest in obtaining the greatest possible profits;

- Economic risk and responsibility.

22.Definition of company and type of the companies

Company it is an association or collection of individuals, people who share a common purpose and unite in order to focus their various talents and organize their collectively available skills or resources to achieve specific, declared goals.

Types of legal entities:

l general partnerships,

l limited liability

l partnerships,

l partnerships with additional liability,

l commandite partnerships,

l joint stock companies (corporations)

l representative

l and branch offices.

l Branches and representative offices of foreign legal entities are also common

23.Partnership: advantages and disadvantages

A Partnership consists of two or more individuals in business together. Partnerships may be as small as mom and pop type operations, or as large as some of the big legal or accounting firms that may have dozens of partners. There are different types of partnerships—general partnership, limited partnership, and limited liability partnership—the basic differences stemming

Advantages:

l Synergy. There is clear potential for the enhancement of value resulting from two or more individuals combining strengths.

l Partnerships are relatively easy to form, however, considerable thought should be put into developing a partnership agreement at the point of formation.

l Partnerships may be subject to fewer regulations than corporations.

l There is stronger potential of access to greater amounts of capital.

Disadvantages:

l Unlimited liability. General partners are individually responsible for the obligations of the business, creating personal risk.

l Limited life. A partnership may end upon the withdrawal or death of a partner.

l There is a real possibility of disputes or conflicts between partners which could lead to dissolving the partnership. This scenario enforces the need of a partnership agreement.

24.Types of takeover

25.Demand. Factors determining the demand

Demand – one of the parties of multidimensional process of the market pricing.

There are so-called non-price factors: income customers, their subjective tastes, fashion, consumer goods, etc.

26.Supply, law of supply:

Refers to how much is produced at every price. Relationship bet. Quantity supplied and the price of that good. LAW OF SUPPLY :The positive relationship between price and quantity of a good supplied: An increase in market price will lead to an increase in quantity supplied, and a decrease in market price will lead to a decrease in quantity supplied.

27.Interaction of supply and demand market equilibrium: EQUILIBRIUM

The condition that exists when quantity supplied and quantity demanded are equal.

Excess demand or shortage is the condition that exists when quantity demanded exceeds quantity supplied at the current price.

The condition that exists when quantity supplied exceeds quantity demanded at the current price.

28.The essence of competition, the theory of perfect and imperfect competition: Definition of Perfect competition:

A market in which there are many small firms, all producing homogeneous goods.

No single firm has influence on the price of the product it sells.

§ A very large no of relatively small buyers and sellers .

• All sellers sell homogenous products

• The firms are free to enter or leave the market

• The firms in industry don’t collude with each other .

• The factors of production must be free to enter or leave the industry.

• Each buyer and seller operates under the condition od certainty.

Feature of Perfect competition

• Many buyers / Many sellers

• Homogeneous Products

• Low-entry / exit barriers

• Perfect information – For both consumers and producers

Firms aim to maximize

29.Monopolistic competition: It refers to the situation where there are many sellers of differentiated products . There is competition keen though not perfect, between many firms making very similar products .since the product is differentiated each seller can independently decide about his own price output policies.

FEATURES

• Many number of sellers

• Product differentiations

-freedom of entry and exit

Monopolistic Competition, also called competitive market, where there are a large number of independent firms which have a very small proportion of the market share

Characteristics of Monopolistic Competition

— There are many buyers and sellers.

— Products differentiated.

— There are few barriers to entry and exit.

— Each firms may have a tiny “monopoly”.

— Firm has some control over price.

30.Oligopoly, monopsony: Oligopoly is a situation where a few large firms compete against each other and there is an element of interdependence in the decision making of these firms

features of oligopoly are:

-Small number of large sellers

-Interdependence

-Existence of price rigidity

-Presence of monopoly element

-Advertising

-Restriction to the entry

— A few very large sellers dominate the industry

— Oligopolists act independently by lowering prices soon after the first seller announces the cut

MONOPSONY:

— Single buyer faces many sellers

— A form of imperfect competition

— Monopolist becomes monopsonist

— Sells products with higher price

— Buys material with lower price

OLIGOPSONY & MONOPSONY:

— Play off one supplier against another => lower cost

— Dictate exact specifications to suppliers

— Don’t have risks

ECONOMICS AS A SCIENCE

Unit 1 What Is Economics

1. Complete the definition.

2. Read these words paying attention to the stress and translate them.

e′conomy, ¸eco′nomical, e′conomist, ¸eco′nomics, ¸eco′nomically, ¸eco′nomic, to e′conomize

3. Choose the correct word.

1. I am a student of (economy, economics) now.

2. At school I didn’t study the (economy, economics) of Great Britain.

3. I hope he’ll make a good (economist, economy).

4. There are many (economic, economical) problems in the world.

5. This car is very (economic, economical).

6. I try to spend money and time (economical, economically).

7. This car (economize, economizes) fuel.

4. Guess the meanings of these words. Which of them can be used as special economic terms?

Principle, luxury, discipline, activity, service, human, to practice, stable, production, distribution, dynamics.

5 Read the text and check your answers in the previous activity.

WHAT IS ECONOMICS

Let's face it: If there's one fundamental principle guiding life on earth, it's scarcity [‘skɛəsətɪ]. There simply aren't enough beachfront houses, luxury cars, and seats at the theater for everyone who wants one! And on a more serious note, there's not enough food, clothing, and medical care for everyone who needs it.

The entire discipline of economics — and all economic activity — arises from a scarcity of goods and services in comparison to human wants and needs. If there is not enough of something for everyone who wants or needs it, society faces a serious problem: it has to make decision about some basic economic questions. Throughout history there have always been people who obtained what they wanted or needed by force*. The barbarians who sacked Rome practiced this form of “economic activity,” and in modern times it is practiced by

armed robbers. But a society* requires an orderly system* of producing and distributing the necessities and luxuries of life. Such a system is essential to a stable society. Economics is the study of systems of production and distribution — which are called economies — and of their fundamentals, dynamics, and results.

*by force силой, *society общество, *orderly system упорядоченная система

6. Make true sentences.

7. Guess the words.

1. Things that we cannot live without are called ________________________

2. Things which give us pleasure and joy are called ________________________

3. When people do not have enough of something they suffer from ____________

4. Everything that is made in a society is called ____________________ and ___________________

5. _____________________ is the process of making things.

6. _____________________ is the process of dividing things among people.

8. Think and speak about the following issues.

• Tell about some people who get what they want by force in modern times.

• Explain why scarcity is an important factor of human life.

• Formulate the basic economic questions which each society has to answer.

9. Study these words and their negative forms and fill in the gaps in the sentences. Then make up your own sentences in which the negative forms are used.

certain (определенный, уверенный) / uncertain

exact (точный, безошибочный) / inexact

predictable(предсказуемый) / unpredictable

precise (точный, четкий, определенный) / imprecise

1. You have to be very _________________ in this job, because a small mistake can make a big difference.

2. Are you _____________________ that you’ll get there in time?

3. We have done this experiment before. The results are rather ___________________.

4. Our train leaves at 10 o’clock ________________________.

10. Read the text and say why economics is inexact.

Date: 2014-12-21; view: 3098