In a market economy, all major decisions related to the production, distribution, commodity and service prices, are made by the government.

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3. In a planned economy the assumptions of the market play a major role in deciding the right path for a country’s economic development.

4. Supply is the sellers’ side of the economy.

5. Demand is the buyers’ side of the economy.

6. The market price for each commodity or service is determined by the interaction of supply and demand.

7. Market economies aim to provide subsidies for a particular industry.

8. In a market economy, prices for different commodities are pre-determined.

9. In a market economy, the amount of regulation controlling different industrial sectors is large.

10. In a mixed economy, the role of the government is to simply make sure that the market is stable enough to carry out its economic activities properly.

11. A planned economy adjusts automatically to meet the changing demand.

12. Firms tend to be highly competitive in a planned economy.

13. Healthcare, education, defense and policing are provided by the private sector in all types of economy.

14. In a planned economy, production alters swiftly to meet the changing demand.

15. Safety standards concerning products, services and working conditions do not require government intervention to protect consumers and workers.

16. In a planned economy, national and state governments play a minor role.

17. The planned economy is a flexible system.

18. The planned economy is rather slow to change in relation to changes in consumer needs and fluctuating patterns of supply and demand.

19. Certain features from both economic systems provide for flexibility in some areas and government control in others.

20. Mixed economies prevail in many countries where neither the government nor the business entities control the economic activities of that country.

Language practice

1.5.1 Match the English terms in the left-hand column with the definitions in the right-hand column.

An industry	A	The organized exchange of commodities (goods, services, or resources) between buyers and sellers within a specific geographic area and during a given period of time.
A business	B	The various external forces that can directly or indirectly affect the many activities of an organization.
An economy	C	A group of firms producing goods or services that are close substitutes-in-consumption.
Competition	D	A situation that exists because society has unlimited wants and needs, but limited resources to be used for their satisfaction.
A profit	E	The contraction phase of the business cycle.
A scarcity	F	The actions of two or more rivals in pursuit of the same objective.
Environment	G	The general condition in which workers are willing and able to produce goods and services but are not engaged in productive activities.
Consumption	H	The willingness and ability to buy a range of quantities of a good at a range of prices, during a given time period.
Unemployment	I	A physiological or biological requirement for maintaining life, such as the need for air, water, food, shelter, and sleep.
Demand	J	The willingness and ability to sell a range of quantities of a good at a range of prices, during a given time period.
A subsidy	K	The system of production, distribution, and consumption of goods and services that a society uses to solve the problem of scarcity.
A market	L	A profit-motivated organization that combines resources for the production and supply of goods and services.
A recession	M	The use of resources, goods, or services to satisfy wants and needs.
Supply	N	The difference between revenue and cost.
A need	O	A payment from government to individuals or businesses without any expectations of production.

1.5.2 Complete the following text using suitable words or phrases from the box below .

A demand E prices

B Forces F market economy

C private sector G public

D intervened H drawbacks

Historically the United Kingdom of Great Britain and Northern Ireland evolved as a _____1_____, with the government playing a passive role, allowing the _____2_____ of supply and _____3_____ to determine what was produced and the _____4_____ charged. However over a period of time the state has _____5_____ to eliminate the _____6_____ of the market economy so that today, alongside a large _____7_____, they have an important _____8_____ sector.

Replace the Russian words and phrases by the English equivalents .

What is Economics?

Neither individuals nor societies can have all the things they would like to have. There simply is not enough of everything. Экономисты note that there is нет предела to the amount or kinds of things that people want. There is, however, a limit to the resources, things used to produce товары и услуги, available удовлетворять потребности. Once that limit is reached, nothing else can be produced. In other words, when a nation’s ресурсы (all its workers, factories, farms, etc.) are fully employed, the only way it will be able увеличить производство of one thing will be by сокращениепроизводства of something else. In short, человеческие потребности are unlimited, but the resources required to satisfy those wants are ограничены. Thus every society is faced with the проблема дефицита.

Since there is a дефицит ресурсов societies must делать выбор about what they want most. Экономика deals with problems of дефицита и выбора. The basic problems of Economics are to determine the most efficient ways распределять ресурсы and solve the problem of scarcity created by society’s unlimited wants and limited resources.

a. Look up the dictionary for the meaning and pronunciation of the following words and word-combinations and use them to discuss the problems outlined in the text.

A significant fault, intermediate, at one extreme… at the other extreme, individuals and businesses, exercise freedom of choice, government restrictions, in response to the demand, to avoid the disadvantages, enjoying the benefits, the private sector, the public sector, share of the output, taxation, transfer payments, healthcare, education, policing, defense.

b. Briefly scan the text and outline the list of major points.

PROJECT WORK

Read the text and in pairs make a report on the following items:

-The extremes of command and market economies.

-The common features of all economies in the world.

-The aim of mixed economies.

-The ways governments intervene in their economies.

Mixed Economies

Command and market economies both have significant faults. An intermediate system has developed, known as mixed economies.

A mixed economy contains elements of both market and planned economies. At one extreme we have a command economy which does not allow individuals to make economic decisions. At the other extreme we have a free market where individuals and businesses exercise considerable economic freedom of choice without any government restrictions. Between these two extremes lies a mixed economy. In mixed economies some resources are controlled by the government while others are used in response to the demand of the consumers.

Technically, all economies of the world are mixed. Some countries are nearer to command economies, while others are closer to free market economies. The aim of mixed economies is to avoid the disadvantages of both systems while enjoying the benefits that they both offer. So, in a mixed economy the government and the private sector interact in solving economic problems. The state controls the share of the output through taxation and transfer payments and intervenes to supply essential items such as healthcare, education, policing, and defense, while private firms produce cars, furniture, electronic items, etc.

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