INTRODUCTION TO THE ECONOMIC SYSTEM
UNIT 1
I. Vocabulary business – a person, firm or other organization which makes or produces a product, buys and sells goods or provides some kind of service, e.g. he intends to buy a business; buying and selling, trade commerce – financial transactions, esp. buying and selling merchandise, on a large scale; it includes all the various business operations, such as banking, insurance, transport and communications that make such transactions possible commodity – an article or raw material that can be bought and sold. esp. a product as opposed to a service, an article of trade, eg. commodity market (coal, cotton, wheat,etc.) competition – rivalry between business concerns in the same market, usually in selling at a lower price or in providing better quality competitive – comparing favourably in price and quality with other products of the same kind and able to attract buyers away from rival products in the market competitiveness – ability of one company to be better than the others competitor – a company that is trying to be better than other companies economy – an organized system for the production, distribution and consumption of wealth, eg. a free / market / mixed economy economics – the science of the production, distribution and consumption of wealth; the condition of a country etc. as regards material prosperity, eg. the economics of a country economic – of or relating to economics, eg. economic development / planning / system / policy economical – careful in the spending of money, time etc. and the use of goods, not wasteful, eg. economical housewife / production / process, economical car (a car with low consumption) 9
UNIT 1
II. Vocabulary Practice 1. Use the words from the box in correct forms to fill in the missing expressions: competition economical business economy competitive
labour laissez-faire commodity commerce tax
1. If the prices of a particular … rise in the economy as a whole, the rise will naturally encourage producers to produce more of this commodity. 2. All consumers and producers rely upon … services such as distribution, banking, transport, etc. 3. In market … the government interferes as little as possible in business affairs. 4. The government may discourage consumption through heavy … such as those on alcohol and cigarettes or petrol. 5. The policy of minimal governmental interference in business affairs is sometimes called … . 6. The private sector includes companies and a great number of small family … . 7. Those who are unable to find work are usually those who have not developed the sort of skills which the … market requires. 8. It is not … to invest money in an obsolete technology. 9. Our firm offers electric irons at most … prices. 10. Modern governments recognize a very important role of … in creating a successful economy and encourage it. For example, they might pass laws to prevent monopolies or price fixing in particular industries.
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Economy in English
III. Reading Any economic system has to solve the problem of scarce resources. Resources, land, raw materials, machinery, commodities, capital, finance, labour, entrepreneurs – are always scarce. Choices have to be made about how these limited resources are used. Any economy, however it is governed, has to make three basic decisions: 1. What is to be produced? 2. How is it to be produced? 3. How is it to be distributed? Depending upon the particular type of economy, the decisions may be made by private individuals (free market economy), the government (planned economy), or a combination of the two (mixed economy). We focus on the free market economy. All countries which have a free market economy share certain basic characteristics. Decisions about productions are made by private individuals. The government interferes as little as possible in business affairs, providing only those services such as defence and the legal structure which are necessary to protect the country’s citizens. Of particular importance are proper legal framework, the right to own and transfer property, an efficient banking system, a sound and convertible currency and an infrastructure able to support widespread business activity and communication. A decentralized banking system is essential to facilitate business lending and the transfer of funds between people and businesses. The basic principle of the free market economy is that production is based upon free enterprise. People and firms produce goods and services in order to make money. Firms are continually attempting to make as much profit as possible. They can only achieve this by producing goods and services that their customers want and by producing as cheaply and efficiently as possible.
Supply and Demand and Market Price Rules Prices are the mechanism by which a free market system works. The price of a product or service depends upon demand (the amount that consumers wish to buy at a particular price) and supply (the amount that producers are willing to sell at the same particular price). Demand and supply are constantly changing, and this affects prices and amounts produced. We speak about an invisible hand of the market. If prices rose above the market price, there would be a surplus or excess 12
Economy in English
6. 7. 8. 9. 10. 11.
What do the prices of goods and services depend on? Why are demand and supply constantly changing? Why has money no value in itself? What occurs if prices rise above the market price? What causes excess demand for particular goods or services? What does sustainable development mean in practice?
4. Composition: Explain the causes of excess supply and excess demand. 5. Translate the phrases into English: 1. svobodné podnikání 2. konvertibilní měna 3. pružnost dodávky 4. cenový mechanismus 5. vyváženost poptávky a dodávky 6. ekonomika volného trhu 7. konkurenční ceny 8. hospodárná výroba 9. soukromý podnikatel 10. mezinárodní obchod 11. rodinný podnik 12. obchodní banka 13. zbožní trh 14. daň na luxusní zboží 15. předmět obchodu 6. Circle the odd word out and explain why you decided so: 1. 2. 3. 4. 5.
business shopkeeper commerce market competition
firm shop assistant trade demand marketing
enterprise entrepreneur marketing call contest
job manufacturer business value rivalry
7. Find the nouns for the verbs in the box and use both nouns and verbs in sentences: invest reduce solve compete support
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decide govern profit interfere discourage
UNIT 1
V. Supplementary Reading Competition Modern governments recognize the role of competition in creating a successful economy and do their best to encourage it. For example, they might pass laws to prevent monopolies or price fixing in particular industries or to “deregulate” an industry so that it is easier for new businesses to enter the market. Special government bodies are often set up to deal with competition issues and supervision of dominant companies. Companies which have a dominant position in the market must not abuse that position by imposing unfair conditions or selling prices.
8. Translate: 1. Člověk je ekonomicky svobodný, jestliže může dělat co chce se svým majetkem, časem a energií. 2. Trh přivádí do vzájemného kontaktu lidi, kteří chtějí kupovat a ty, kteří chtějí prodávat. 3. Volné podnikání povzbuzuje dobře fungující výrobu, protože firmy jsou motivovány ke snižování nákladů a k výrobě kvalitního zboží. 4. Dalším podstatným rysem tržní ekonomiky je trh pracovních sil. 5. Podniky se ucházejí o pracovní sílu zrovna tak jako o spotřebitele. 6. Je pravda, že ve většině zemí s tržním hospodářstvím je určitá nezaměstnanost. 7. Ti, kteří nejsou schopni najít si práci, jsou obvykle nekvalifikovaní pracovníci s nejnižším vzděláním. 8. Podniky, které jsou schopny uspokojit potřeby spotřebitelů, jsou ziskové a přežijí i v době ekonomické krize. 9. Jestliže se ceny za určité zboží zvýší, jejich růst povzbudí výrobce vyrábět více, zejména pokud nedojde k poklesu poptávky. 10. Když ekonomové hovoří o zákonu poptávky a nabídky, chtějí tím říci, že cenový pokles může vést ke zvýšení poptávky po zboží, které se může stát nedostatkovým.
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Economy in English
VI. English-Czech Vocabulary balance business commerce commodity competition competitive competitivnes competitor demand economic economical economics economist economy entrepreneur enterprise enterpriser goods labour laissez-faire market merchandise offer order output price elasticity 16
rovnováha, vyváženost; obch. bilance; vyvážit obchodní podnik, firma; obchodování, obchody obchod zejm. mezinárodní nebo finanční; obchodování druh zboží jako předmět obchodu, komodita, výrobek soutěž, konkurence soutěže schopný, konkurenční konkurenceschopnost konkurent požadavek, poptávka; žádat, požadovat ekonomický, národohospodářský; přinášející zisk hospodárný, úsporný, šetrný ekonomie (věda) ekonom, národohospodář ekonomika; hospodářství podnikatel, provozovatel podnik, závod; podnikání; podnikavost podnikatel, provozovatel zboží (zejm. dopravované nebo prodávané) práce; pracovní síla ponechání volnosti v hospodářské politice, podnikání, na trhu apod. trh, tržiště; trh určité komodity; skupina poptávajících; nabízet na trhu zboží jako předmět obchodu nabídka; nabízet příkaz, objednávka; přikazovat, objednávat produkce, objem výroby cenová elasticita
