The dominant trend in American agriculture can be summerized in two words increased productivity. Gross agricultural output has increased dramatically: 50 years ago a farmer fed 10 people; at present the average farmer feeds 75.
American agriculture produces more food products than any other capitalist country. Production of most crops substantially exceeds domestic needs, making the United States a leading exporter of food. About a fifth of the countrys territory is arable. The rainfall is not high, and irrigation is widely used there. The principal crops grown in the country are: corn, wheat, soy-beans, sugar-cane and sugar beets, sunflower, tobacco, hay, rice, cotton, oats, and barley.
The United States harvests a lot of vegetables such as tomatoes, potatoes and onions. Florida and California are famous for their fruit production. They grow oranges, lemons, tangerines and grapefruit. Strawberries, pears and apples are also produced in large quantities.
Animal husbandry is also developed in the country. Pastures occupy more than one-forth of the United States. The highlands in the West of the country are famous for their dairy and beef cattle breeding, pig raising, and sheep farming. Dairying is well developed, and milk, cheese, and butter production exceed domestic needs. Wool production, leather and textile industries are also developed there. Poultry-farming and vegetable growing are concentrated in the countryside near all the big cities.
COMMENTS
1. GNP ( i )
2. farming i
3. increased productivity oi
4. gross agricultural output i i
5. domestic needs ii
6. arable land
7. soy-beans , i
8. sugar-cane
9. pasture
10. wool production
11. leather industry i i
12. countryside i ii
U N I T 5
Text A
Studying economics for the first time, it is necessary to know what economics is all about. Unfortunately, it is not possible to define the subject by a single word. Economics was defined as the study of mankind in the everyday business life. This means that economics deals with production, distribution, exchange and consumption. It answers such questions as: How do we produce all the things we need? How are prices determined? Economics is also concerned with unemployment, inflation, international trade, the interaction of business and labour, and the effects of government spending and taxes.
Economics does not stop with the description of economic activity because description alone leaves unanswered many important why and how questions.
Economics is a social science like history, geography, politics, psychology and sociology. It is the study of human efforts to satisfy what seems like unlimited and competing wants through the careful use of relatively scarce resources. Economists study what is or tends to be and how it came to be. They do not in any way pretend to tell what ought to be. People must make up their own minds about that.
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Economics is therefore concerned with activities relating to wealth, i.e. production, consumption, exchange and distribution.
For our own purpose, we shall define economics as the study of man in his attempts to gain a living by utilizing his limited resources.
COMMENTS
1. ... what economics is all about i
2. to be concerned with ;
3. the effects of government spending i
4. ... unlimited and competing wants i ,
5. to make up ones own mind i
6. to gain a living
Text B
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 accomplishment.
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, hamburger or other favourite food. That is there are any number of foods that will satisfy the basic need for food.
The point is that the range of things represented by the term 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 marketplace 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
COMMENTS
1. key terms i i
2. needs
3. wants
4. demand
5. the point is ,
6. particular product
7. measurable demand
Text C
The study of economics is concerned with economic products goods and services that are useful, relatively scarce and transferable to others. The important thing is that economic products are scarce in an economic sense. That is one cannot get enough to satisfy individual wants and needs. The fact that economic products command a price shows that they have these characteristics.
The terms goods and services are used to describe many things people desire. Consumer goods are intended for final use by individuals to satisfy their wants and needs. Manufactured goods used to produce other goods and services are called capital goods. An example of capital goods would be a computer in a school.
The other type of economic product is a work that is performed for someone. Services can include haircuts, repairs to home appliances and forms of entertainment like rock performances. They also include the work performed by doctors, lawyers and teachers. The difference between goods and services is that the services are something that cannot be touched or felt like goods.
Many other things sunshine, rainfall, fresh air are known as free products because they are so plentiful. No one could possibly own them, nor would most people be willing to pay anything for them. In fact, some are so important, that life would be impossible without them. Even so, free products are not scarce enough to be major concern in the study of economics.
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COMMENTS
1. wants and needs
2. to be intended for
3. capital goods o
4. home appliances i
5. free products
Text D
In economics the term value means something having a worth that can be expressed in dollars and cents. Someone may say, for example, that he or she has a valuable coin, the value is determined by the price someone would pay for the collection.
But what makes some things worth more than others? The diamond-water paradox, also known as the paradox of value, helps answer this question. Early economists observed, that some things like water were essential to life, yet had little monetary value. Other things, like diamonds, were not essential but had higher value.
Later economists decided that part of the reason was due to scarcity. For example, water is so plentiful in many areas that it has little or no value. On the other hand, diamonds are so scarce that they have great value. In order to have value, it has to be somewhat scarce. Scarcity, however, is not enough. If something is to have value, it must also have utility, or the capacity to be useful to someone. Utility is not something that is fixed and can be measured like weight or height. Instead, the utility of goods or services may vary from one person to the next. One person may, for example, get a great deal of enjoyment from a home computer, another may get very little. In the end, for something to have value, it must be scarce and have utility.
Another economic concept is wealth the sum of those economic products that are tangible, scarce, useful and transferable from one person to another. Most economic goods are counted as wealth, but services are not. The reason for this is that it is difficult to measure the value of services accurately. For example, it is difficult to measure the contribution made by peoples abilities and talents to a nations wealth
A countrys total worth, then is the stockpile of useful scarce, tangible things in existence at a given time. National wealth includes all such items as natural resources, factories, stores, houses, theatres, books, video games etc.
COMMENTS
1. what makes some things worth more than others? i i , i ii?
2. monetary value i
3. the reason was due to
4. a great deal of
5. stockpile of useful scarce i
6. tangible things i i
U N I T 6
Text A
The reason people cannot satisfy all their wants and needs is the scarcity of productive resources. These resources or factors of production are called land, labour, capital, and organization or entrepreneurship. They provide the means for a society to produce and distribute its goods and services.
As an economic term land means the gifts of nature or natural resources not created by human efforts. They are the things provided by nature that go into the creation of goods and services. Land has a broad meaning. It is not only land itself, but also what lies under the land (like coal and gold), what grows naturally on top of the land (like forests and wild animals), what is around the land in the seas and oceans and under the seas and oceans (like fish and oil). It includes deserts, fertile fields, forests, mineral deposits, rainfall, sunshine and the climate necessary to grow crops.
Because there are only so many natural resources available at any given time, economists tend to think of land as being fixed or in limited supply. There is not enough good farmland to feed all of the earths population enough, sandy beaches for everyone to enjoy, or enough minerals to meet peoples expending energy needs indefinitely.
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The second factor of production is labour people with all their efforts and abilities. Unlike land, labour is a resource that may vary in size over time. Historically, factors such as population growth, immigration, famine, war and disease have had a dramatic impact on both the quantity and quality of labour.
Labour is the human input into the production process. It may be mental or physical. But in many tasks it is necessary to combine mental activity with physical effort. The price paid for the use of labour is called wages. Wages represent income to workers, who own their labour. Land and labour are often called primary factors of production. It is one whose quantity is determined outside the economy.
COMMENTS
1. wants and needs
2. factors of production
3. entrepreneurship
4. gifts of nature
5. dramatic impact i
6. wages
7. income ,
8. primary factor of production
Text B
The third factor of production is capital the tools, equipment and factories used in production of goods and services. It is a produced factor of production, a durable input which is itself an output of the economy. For example, we build a textile factory and use it to produce shirts, or assemble
a computer and then employ it in educating students.
As noted earlier, such items are also called capital goods. This is to distinguish them from financial capital, the money used to buy the tools and equipment used in production.
Capital is unique in that, it is the result of production. A bulldozer may be an example of capital goods used in construction. At the same time, it was manufactured in a factory which makes it the result of earlier production.
When the three inputs land, labour and capital are present, production or the process of creating goods and services, can take place. Even the production of the service called education requires the presence of land, labour and capital.
Entrepreneurship, the managerial or organizational skills needed by most firms to produce goods and services, is the fourth factor of production. The entrepreneur brings together the other three factors of production land, labour and capital. When they are successful, entrepreneurs earn profits, the return or reward for the risks, innovative ideas and efforts put into the business. When they are not successful, they suffer losses.
COMMENTS
1. output ,
2. capital goods
3. financial capital
4. at the same time ,
5. input ,
6. managerial or organizational skills
7. profit
8. return or reward
9. to suffer losses
U N I T 7
Text A
The survival of any society depends on its ability to provide food, clothing and shelter for its people. Since these societies are also faced with scarcity decisions concerning What, How and for Whom to produce must be made.
All societies have something else in common. They have an economic system or an organized way of providing for the wants and needs of their people. The way in which these decisions are made will determine the type of economic system they have. There are three major kinds of economic systems: traditional, command and market.
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Traditional Economy
In a society with a traditional economy nearly all economic activity is the result of ritual and custom. Habit and custom also prescribe most social behaviour. Individuals are not free to make decisions based on what they want or would like to have. Instead, their roles are defined. They know what goods and services will be produced, how to produce them, and how such goods and services will be distributed.
An example of traditional economy is the society of polar eskimo of the last century. For generations, parents taught their children how to survive in a harsh climate, make tools, fish and hunt. Their children, in turn, taught these skills to the next generation. The main advantage of the traditional economy is that everyone has a role in it. This helps keep economic life stable and community life continuous. The main disadvantage of the traditional economy is that it tends to discourage new ideas and even punishes people for breaking rules or doing things differently. So it tends to be stagnant or fails to grow over time.
COMMENTS
1. social behaviour : i i
3. to discourage
4. ... tends to be stagnant i
5. ... fails to grow over time i
Text B
Other societies have a command economy one where a central authority makes most of the What, How and for Whom decisions.
Economic decisions are made at the top and people are expected to go along with choices made by their leaders. It means that major economic choices are made by the government. It decides goals for the economy and determines needs and production quotas for major industries. If the planning body wants to stress growth of heavy manufacturing, it can shift resources from consumer goods to that sector. Or, if it wants to strengthen national defence, it can direct resources from consumer goods or heavy manufacturing to the production of military equipment and supplies.
The major advantage of a command system is that it can change direction drastically in a relatively short time. The major disadvantage of the command system is that it does not always meet the wants and needs of individuals.
The second disadvantage of the command economy is the lack of incentives that encourage people to work hard. In most command economies today workers with different degrees of responsibility receive similar wages. In addition, people seldom lose their jobs regardless of the quality of their work. As a result, there is a tendency for some to work just hard enough to fill production quotas set by planners.
The command economy requires a large decision-making bureaucracy. Many clerks, planners, and others are needed to operate the system. As a result, most decisions cannot be made until a number of people are consulted, or a large amount of paperwork is processed. This causes production costs to increase and decision-making to slow down. Thus, a command system does not have the flexibility to deal with day-to-day problems.
COMMENTS
1. ... people are expected to go along with i,
2. to shift resources i
5. regardless of
Text C
In a market economy, the questions of What, How and for Whom to produce are made by individuals and firms acting in their own best interests. In economic term a market is an arrangement that allows buyers and sellers to come together to conduct transactions.
Since consumers like products with low prices and high quality, producers in a market economy will try to supply such products. Those who make the best products for the lowest prices will make profits and stay in business. Other producers will either go out of business or switch to different products consumer can buy.
A market economy has several major advantages that traditional and command economies do not have. First, a market economy is flexible and can adjust to change over time.
When gas prices in the United States began to level off in 1985 and then decline in 1986, the trend slowly began to reverse.
The second major advantage of the market economy is the freedom that exists for everyone involved. Producers are free to make whatever they think will sell. They are also free to produce their products in the most efficient manner. Consumers on the other hand are free to spend their money or buy whatever goods and services they wish to have.
The third advantage of the market economy is the lack of significant government intervention. Except for national defence, the government tries to stay out of the way. As long as there is competition among producers, the market economy generally takes care of itself.
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The final advantage of the market economy is the incredible variety of goods and services available to consumers. In fact, almost any product can and will be produced so long as there is a buyer for it.
COMMENTS
1. to conduct transactions ii i
4. to switch to i
5. to stay out of the way
6. incredible variety i iii
U N I T 8
Text A
One of the major economic institutions is the business organization, a profit-seeking enterprise that serves as the main link between scarce resources and consumer satisfaction. These businesses compete with one another for the chance to satisfy peoples wants.
There are three major kinds of business organizations: the sole proprietorship, the partnership and the corporation.
The most common form of business organization is the sole proprietorship a business owned and run by one person. The main advantage of a sole proprietorship is that it is the easiest form of business to start and run. There is almost no red tape involved. Most proprietorships are able to open for business as soon as they set up operations. In the event that the owner wants to dissolve the business, a sole proprietorship is as easily dissolved as it is formed.
Sole proprietors own all the profits of their enterprises and are free to make whatever changes they please. They have minimal legal restrictions and do not have to pay the special taxes placed on corporations. They also have the opportunity to achieve success and recognition through their individual efforts. Sole proprietorships are generally found in small-scale retail and service businesses such as beauty salons, repair shops, or service stations.
The major disadvantage of a sole proprietorship is the unlimited liability that each proprietor faces. Since the business and the owner are legally the same, the sole proprietor is liable for all financial losses or debts that the business may incur. If a business fails, the owner must personally assume the debts. This could mean the loss of personal property such as automobiles, homes and savings.
A second disadvantage of the sole proprietorship is that it has limited financial resources. The money that a proprietor can raise is limited by the amount of savings and ability to borrow. Another serious problem faced by the sole proprietorship is the lack of continuity of the business. When the owner dies, the business also legally terminates.
COMMENTS
1. a profit-seeking enterprise i
2. sole proprietorship/sole trader/one-man firm i i
5. red tape
6. to dissolve the business
7. to achieve success
10. to assume the debts /
Text B
A partnership is a business that is jointly owned by two or more people who have combined their talents and resources for the purpose of earning a profit. Partnerships are most common in such professional fields as medicine, law, accounting, stockbrokerage, but they are also found in manufacturing, wholesaling and retailing.
The most common form of partnership is a general partnership. General partners own the business, work in it and share the profits and losses. They are responsible for the management of the business and usually agree with each other before making any major decisions.
There may be a special type of partnership, called limited partnership. Limited partners are only liable for the amount they have invested in the business. They are usually not involved in the management of the firm.
Partnerships have more advantages than sole proprietorships. Like sole proprietorship they are easy to form and often get tax benefits from the government.
Partnerships have certain disadvantages too. The major disadvantage is unlimited financial liability. It means that each partner is responsible for all debts and is legally responsible for the whole business. But one of the greatest problems in partnerships is that partners may disagree with each other causing management conflicts.
COMMENTS
1. stockbrokerage/stockbroking
3. general partnership -
Text C
Nearly 90 per cent of all business is done by corporations. A business corporation is an institution established for the purpose of making profit. It is operated by individuals. People, who would like to form a corporation, must file for permission in the state where the business will have its headquarters. If approved, a charter, government document that gives permission to create a corporation, is granted. The charter states the name of the company, address, purpose of business etc.
The charter specifies the number of shares of stock, or ownership parts of the firm. These shares are certificates of ownership and are sold to investors called shareholders or stockholders. The money is then used to set up corporation. If the corporation is profitable it will eventually issue dividend or a check, representing a portion of the corporate profits to shareholders.
There are several advantages of the corporate form of ownership. The major advantage is the ability to acquire greater financial resources than other forms of ownership. The next advantage is that the corporation attracts a large amount of capital and can invest it in plants, equipment and research. It can offer higher salaries and thus attract talented managers and specialists. Corporations have great capacity for growth and expansion.
Corporations face some major disadvantages. It is difficult and expensive to organize a corporation. The process of obtaining a charter usually requires the services of a lawyer. Most small firms prefer to avoid these expenses by forming proprietorships and partnerships. There is also an extra tax on corporate profits. The government taxes corporate income in addition to the taxes paid by shareholders on their dividends.
COMMENTS
1. file for permission
2. the number of shares of stock i i
3. certificates of ownership i
U N I T 9
Text A
Economists classify markets according to conditions that prevail in them. They ask questions like the following: How many supplies are there? How large are they? Do they have any influence over price? How much competition is there between firms? What kind of economic product is involved? Are all firms in the market selling exactly the same product, or simply similar one? Is it easy or difficult for new firms to enter the market? The answer to these questions helps to determine market structure, or the nature and degree of competition among firms operating in the same market. For example, one market may be highly competitive because a large number of firms produce similar products. Another may be less competitive because of fewer firms, or because the products made by each are different or unique.
