Fill in the blanks with appropriate words: a profit, resources, the answers, prices, consumers, levels, a price, money.

1. Property owners know they will make ... if they can produce goods and services that buyers want, at ... they are willing to pay.

2. Government in America functions at three ....

3. In our economic lives we spend ... to buy the things we want.

4. Price stability refers to time during which ... remain constant.

5. As a national goal, economic efficiency refers to the entire economy's ability to get the most out of its limited ... .

6. ... are people who use goods and services to satisfy their wants.

7. The price system provides ... to the fundamental questions of what goods and services will be produced, how they will be produced, and who will receive them.

4. Read and translate the text:

The «pillars» of economic system are private property, the price system and competition.

The right to private property gives the owners of natural resources and capital the incentive to use their assets as they can. The price system provides the answers to the fundamental questions of: «What goods and services will be produced?» ; «How they will be produced?» and «Who will receive them?». Competition refers to the rivalry among buyers and among sellers.

Economic incentives influence our decisions about what and where to buy. The desire to achieve the greatest profit for our efforts is the principal economic incentive in the American and other market economies. Economists refer to this as economic self-interest.

Profits are what remain after the costs of production have been deducted from sales. The quest for profits, or the profit motive, as it is often called, is the force that drives our economic system.

People in business buy or sell land or other natural resources if they think they can profit from the transaction. They also put those resources to use in such a way as to make the greatest profit. Profits affect the allocation of labor, influence the allocation of capital resources. Profits drive entrepreneurs to risk capital, hire employees and purchase the things they need to produce goods and services. Profits also provide the incentive to improve products, reduce costs and outsell the competition.

Government in America functions at three levels: federal, state and local.

Governments

· compel people to sell their property for public use through the power of eminent domain;

· decide who may sell electric power in a geographic region;

· control which medicines may be sold commercially;

· licence certain businesses (such as banks, barber shops, taxi cabs and restaurants);

· pay dairy farmers for not producing as much milk as they can;

· forbid export of certain machinery to specific foreign countries;

· establish the minimum wages employers must pay;

· issue permits for and inspect construction of homes and buildings.

The following economic responsibilities are best fulfilled by government:

· safeguarding the market system;

· providing public goods and services;

· dealing with externalities;

· assisting those in need;

· helping specific groups;

· stabilizing the economy.

The gross national product, or GNP, is the total value of all the goods and services produced by the American economy in a single year. Government transfer payments, payments like Social Security benefits, pensions, welfare, and interest on government debt represent a significant percentage of GNP.

In order to calculate the GNP, government economists add the amounts that were spent by the three elements of the economy (households, business and government) to purchase the finished products. We can express this mathematically as С+I+G=GNP, where:

С – consumer household spending;

I – investment, or business;

G – government purchases of goods and services.

5. Answer the following questions:

1. What are the «pillars» of economic system?

2. What does the right to private property give the owners of natural resources and capital?

3. How do prices influence American economic system? Give your own examples.

4. What does competition refer to?

5. How do you understand the term «profits».

6. What is the force that drives our economic system?

7. What is the role of profits in the economic system?

8. What economic responsibilities are best fulfilled by government?

9. What is «the gross national product»?

6. Define the terms:

GNP, competition, economic self-interest, profit motive, private property, consumers, profit, price system

7. Translate into English:

1. Приватна власність, цінова система, конкуренція – головні «опори» економічної системи. 2. Цінова система відповідає на такі питання: а) які товари та послуги вироблятимуть? б) як їх вироблятимуть? в) хто їх отримуватиме? 3. Економічні стимули впливають на наше рішення, що і де купити. 4. Бізнесмени купують або продають землю чи інші природні ресурси, якщо сподіваються на прибуток від цієї угоди. 5. Валовий національний продукт – це загальна вартість усіх товарів і послуг, вироблених за один рік. 6. Для того, щоб купити щось, треба мати гроші. 7. Споживачі – це люди, які користуються товарами та послугами для задоволення своїх потреб.

8. Read and dramatize the following dialogue:

Mary (a student): Would it be troubling you too much, Mr. Brown, if I ask you some questions about economics?

Mr. Brown (en American teacher of economics): Not at all, dear. I'll answer all your questions with great pleasure, but what particulars are you interested in?

M.: I'm mostly interested in everything concerning the American economic system. Mr. В.: Well, ask your questions and I'll do my best to satisfy you.

M.: Thank you. First of all I should like to know what is Adam Smith and why is he considered «the father of modern economics»?

Mr. В.: Well, you see, 1776’ the year that we associate with the signing of the Declaration of Independence, also marked the publication in England of one of the most influential books of our time «The Wealth of Nations» written by Adam Smith, It earned the author the title «The father of economics».

M.: Did he describe the principal elements of the economic system in this book?

Mr. В.: Yes, he did. He differed with the physiocrats who argued that land was the only source of wealth. He also disagreed with the mercantilists who measured the wealth of a nation by its money supply, and who called for government regulation of the economy in order to promote a «favorable balance of trade».

M.: In Smith's view a nation's wealth was dependent upon production, not agriculture alone, wasn't it?

Mr. В.: Yes, it was. How much it produced, he believed, depended upon how well it combined labor and the other factors of production. The more efficient the combination, the greater the output, and the greater the nation’s wealth.

The heart of Smith's economic philosophy was his belief that the economy would work best if left to function on its own without government regulation. In those circumstances, self-interest would lead business firms to produce only those products that consumers wanted and to produce them at the lowest possible cost. They would do this, not as a means of benefitting society, but in an effort to outperform their competitors and gain the greatest profit. But all this self-interest would benefit society as a whole by providing it with more and better goods and services, at the lowest prices.

M.: Now, I know why Adam Smith is considered «the father of economics». I think that the other sections dealing with the factors of production, money and international trade are as meaningful today as when they were first written.

Mr. В.: Yes, of course. Adam Smith gave the best description of the principles upon which our economic systems are based.

9. Make your own dialogue using the following words, expressions and word-combinations:

the role of government, free enterprice, price system, the American economic system, private property, competition, gross national product

10. Open the brackets using the Present Indefinite Tense in the Passive Voice:

Model: Every society (to face) with the identical problem of scarcity.

Every society is faced with the identical problem of scarcity.

1. Human wants (to unlimit), but the resources necessary to satisfy those wants (to limit). 2. The total value of the goods and services produced by the economy in a single year (to call) the gross national product (GNP). 3. Mr. Redd (to offer) an excellent price for selling his land. 4. The term capital (to use) often by business people. 5. Monopolies can set the price at which their goods (to sell).

11. Read and change the sentences according to the model:

Model: Adam Smith describes the principal elements of the economic system in his book «The Wealth of Nations».

The principal elements of the economic system are described by Adam Smith in his book «The Wealth of Nations».

1. Everything concerning the. American economic system interests me. 2. They consider Adam Smith «the father of modern economics». 3. Есоnomic incentives influence our decisions about what and where to buy. 4. Economic forces affect decisions in the world of business. 5. Prices direct market economies.

12. Translate into English:

1. Рентою називають ціну за користування землею. 2, Термін «капітал» часто вживається бізнесменами. 3. Економічні системи можуть бути класифіковані як традиційні, загальні та ринкові. 4. Людей, які користуються товарами та послугами для задоволення своїх потреб, називають споживачами. 5. Загальна вартість усіх товарів і послуг за один рік називається валовим національним продуктом.

13. Communicative situations:

Marta Redd owns a 10-acre plot of ground at the eastern edge of town. It is next to an area that is «going commercial». Last month Ms. Redd was offered an excellent price for selling her land to the Blue Manufacturing Company. Blue wanted to erect a new plant on the land. Ms. Redd knew that if she sold her acreage to the firm she would receive more than if she continued to lease it to Frank White, a farmer who is presently growing vegetables on the land.

1. Why did Blue Manufacturing want to buy Ms. Redd's land?

2. Why is Redd likely to accept Blue's offer?

3. How will these events affect White?

4. Explain how the story illustrates the ways that the opportunity cost of land, profits, and the profit motive affect the use of land.

5. Describe a situation in which the profit motive would affect the use of another productive resource (labor, capital, or entrepreneurship).

unit 3 THE CONSUMER IN OUR ECONOMY

1. Read and memorize the following words, word-combinations and word-groups:

to meet one's needs – задовольняти потреби

e.g. Many businesses work very hard to meet your needs and wants.

wage(s) (syn. salary) – заробітна плата

e.g. In return for working, you will receive a wage or salary.

wealth – багатство

e.g. Wealth is the value of the things you own.

to deposit money in a savings account – класти гроші на ощадний рахунок

e.g. We decided to deposit money in a savings account.

to earn interest – одержувати відсотки

to loan – позичати, давати позику

e.g. Wealth, in the form of money that is loaned to others or deposited in a savings account, will earn interest.

expenditures – витрати

savings – заощадження

e.g. The Greens plan their expenditures and savings very carefully.

to make one's decision – приймати рішення

e.g. When the time comes to make a major purchase, we compare products and prices before making our decision.

to keep track – дотримуватися курсу

e.g. Most of the time, we are able to keep track of our expenditures (the money spent), so that we are able to meet our immediate needs.

to exceed – перевищувати

surplus – лишок

e.g. Budgets in which income exceeds expenditures will have a surplus.

rate of return – норма прибутку

e.g. The rate of return is expressed as a percentage of the amount on deposit for a period of a year.

compound interest – складні відсотки

e.g. Most accounts offer compound interest.

yield – прибуток

e.g. It is important to distinguish between rate of return and yield, the actual amount of interest earned.

to share risk – розподіляти страхову суму

e.g. Insurance enables people to share risk.

endowment insurance – страхування-вклад

e.g. Endowment insurance protects the insured for a specific number of years.

consumer credit – споживчий кредит

e.g. Consumer credit provides cash, goods, or services now, while spreading repayment into the future.

finance charge – фінансові витрати

e.g. Finance charge is the total amount you pay to use credit.

passbook loan – книжка займу

e.g. If you have a savings account, you may to apply for a passbook loan against your balance in that account.

2. Give English equivalents of the following:

дотримуватися курсу, фінансові витрати, витрачати гроші, складні відсотки страхування-вклад, приймати рішення, класти гроші на банківський рахунок, одержувати відсотки, захист інтересів споживача, норма прибутку, джерело прибутку, споживчий кредит, задовольняти потреби.

3. Fill in the blanks with appropriate words: credit, yield, income, insurance, salary, a budget, money.

1. ... refers to earning paid on a weekly or monthly basis.

2. Interest and rent are two forms of... that can be earned by wealth.

3. ... is a financial plan that summarizes income and expenditures over a period of time.

4. Banks and savings institutions protect your … against fire, theft and other disasters.

5. ... depends on the rate of return and the frequency of compounding.

6. Property ... protects policyholders against the loss or damage of their property.

7. Change accounts, credit cards, installment plans, car loans and household mortgages are some of the best known forms of ....

4. Read and translate the text:

Most of the income you are likely to earn will come from work. In return for working, you will receive a wage or salary. (The term «wage» typically refers to the earning of workers paid by the hour or unit of production. «Salary» refers to earning paid on a weekly or monthly basis.) How much you earn will depend on your job, your abilities, your performance, and a number of other factors.

Wealth can be expressed as the value of the things you own. Adding the value of all your possesions by banks accounts, savings, and the like will give you the total amount of your wealth.

Used in certain ways, wealth can earn income. If you owned a motorcycle, you might be able to let others use it for a fee. In that instance economists would say that you used your wealth to earn «rent». Wealth in the form of money that is loaned to others or deposited in a savings account will earn interest. Interest and rent are the two forms of income that can be earned by wealth.

The number and value of things we are able to buy depends upon the size of our income and how wisely we spend it.

To help keep track of income and expenditures, many people use personal budgets. A budget is a financial plan that summarizes income and expenditures over a period of time. When a budget has expenses that exactly equal income, it is said to be balanced. When proposed expenses are greater than expected income, the budget is said to have a deficit. Budgets in which income exceeds expenditures will have a surplus.

Although there are as many ways to prepare a budget as there are people who use them, the process usually involves three steps: setting financial goals, estimating income, and planning expenditures.

Bank and savings institutions protect your money against fire, theft and other disasters.

One of the main reasons people save their money is to earn interest, the income from allowing someone else to use one's capital. The amount that they earn is known as the rate of return which is expressed as a percentage of the amount on deposit for a period of a year. A deposit of $100 in an account paying 5 percent, for example, would earn a total of $5 in interest over a year. The $5 is the return; the rate of return is 5 percept ($5 divided by $100).

Most accounts offer compound interest. This is interest computed on the principal and on the interest that was previously paid.

The rate of return offered by banks and savings institutions will vary with economic conditions and the length of time they hold your money. It is also important to distinguish between rate of return and yield, the actual amount of interest earned. Yield depends on the rate of return and the frequency of compounding.

Liquidity is a measure of the ease with which you can convert your savings to cash. The easier it is to withdraw your funds, the greater is the liquidity.

Theft, accident, sickness, and natural disasters are daily risks of life. Just as we do our best to avoid the physical consequences of these perils, we can also protect ourselves from their financial cost. We do this by sharing the risk of that loss with others through insurance. You can purchase insurance on your life and to pay your medical bills. You can purchase property insurance to protect your car, home, and other major possessions from damage or theft. Liability insurance protects you if you should injure others or damage their property.

One of the principal services offered by savings institutions and banks is the checking account. Some of the things that consumers need to know in using and maintaining a checking account are reviewed in the Study Guide.

Credit allows you to purchase the things you want now and pay for them over a special period of time. Credit can be useful but it does require good character, capital, and capacity to repay the loan. Credit can be expensive.

The purpose of advertising is to sell goods and services. While certain advertising techniques benefit consumers, others do not. Consequently, consumers ought to be familiar with the kinds of strategies that advertisers use to sell their products.

The principal responsibility for consumer protection lies with government agencies at the federal state and local levels. There are, however, a number of organizations, sponsored by the private sector, whose purpose is to protect consumers. These include such well-known institutions as the Better Business Bureau and local Chambers of Commerce.

Because consumers make up the largest economic sector (business and government are the other two), the level of consumer spending has a direct impact on the economy as a whole.

5. Answer the following questions:

1. What is the difference between «wage» and «salary»?

2. How can «wealth» be expressed?

3. How can you use your wealth to get income? Give your examples.

4. What is a budget?

5. When is a budget said to have a deficit and when a surplus?

6. What three steps are involved to prepare a budget?

7. What makes up your personal budget?

8. What is the rate of return?

9. What is liquidity?

10. What does credit allow you?

11. What is the purpose of advertising?

6. Define the terms:

Wage, budget, liquidity, the rate of return, salary, wealth, surplus, compound interest.

7. Translate into English:

1. Велика кількість підприємств старанно працюють, щоб задовольнити ваші потреби. 2. Ми вирішили покласти гроші на рахунок у банку. 3. Фінансові витрати – це загальна сума, яку ви сплачуєте, щоб скористатися кредитом. 4. Страхування-вклад захищає страхувальника кілька років. 5. За свою роботу ви отримуєте заробітну плату. 6. Підсумувавши вартість вашої власності, банківських рахунків, заощаджень, ви отримуєте загальну суму вашого багатства. 7. Кількість і вартість речей, які ви спроможні купити, залежить від розміру вашого прибутку та від того, як розумно ви витратите його. 8. Банки та ощадні установи допоможуть захистити ваші гроші від пожежі, крадіжки та інших нещасних випадків.

8. Read and dramatize the following dialogue:

A.: Sorry, I will be very obliged to you if you will answer some of my questions.

B. : O.K. I'm at your disposal.

A.: I know that most of the nation's personal savings are held by the commercial banks, different types of savings institutions, and credit unions. The deposits held by these institutions are insured by agencies of the federal government. But I wonder what kinds of accounts can be offered by savings institutions?

B.: Well, savings institutions offer the following kinds of accounts: passbook and statement saving accounts, NOW (Negotiable Order of Withdrawal) accounts, money-market accounts, certificates of deposit, credit-union accounts. U.S. savings bonds and money-market bonds.

А.: O.K. It's very interesting. Can you tell me some more about passbook and statement accounts?

В.: Oh, yes, of course. I can. The safety of your money and high liquidity are the most important advantages of these accounts. Minimum balance requirements are usually quite low, and your savings can be withdrawn at any time.

А.: Is there any disadvantage to this kind of account?

В.: The disadvantage of them is that they pay relatively low interest rates.

А.: I see. And what about NOW and money-market accounts? Please, some words about them.

В.: Well, NOW accounts pay interest and allow the depositor to write checks. NOW accounts generally offer a slightly lower rate of return than savings accounts. Money-market accounts allow you to write a limited number of checks while participating in the «money-market» where banks and other businesses buy and sell short-term credit instruments and notes that come due in a year or less. The rate of return for money market accounts is usually higher than for passbook savings accounts. Would you like me to tell you about certificates of deposit and credit-union accounts?

А.: Oh, no, thank you very much. But it seems to me I know everything about them. Certificates of deposit, or CD's, pay the highest rates of interest offered by banks and savings institutions. They require the money to be left on deposit for a specified period of time that can run from a few weeks to five of more years. The money can be withdrawn early, if necessary, but not without a penalty.

Credit unions often serve people who have the same employer, work in the same industry, or belong to a particular church, labor union, or club. The rate of return offered by credit unions is higher than that of the other institutions. But what do you know about U.S. savings bonds and money-market funds?

В.: U.S. savings bonds can be purchased at most savings institutions. Guaranteed by the United States government, they are one of the safest investments one can make. After five years bonds earn a variable rate adjusted every six months. And money-market funds use the resources of their investors to buy money-market certificates. Money- market funds generally pay a higher rate of return than savings and NOW accounts. Unlike other accounts at savings institutions, money-market fund accounts are not insured nor do they provide check-writing privileges.

А.: I'm more than grateful to you for such important information. Thank you ever so much.

В.: Don't mention it.

9. Make up your own dialogue using the following words, expressions and word-combinations:

to deposit money in a savings account, wage, to make one's decision, wealth, to earn interest,to loan, finance charge, rate of return

10. Express the following in the Passive Voice:

Model : The health maintenance organization or HMO provided its members with complete medical coverage.

The members of the health maintenance organization were provided with complete medical coverage.

1. Partners brought additional funds to a proprietorship. 2. You received a wage in return for working. 3. The Greens planned their expenditure and savings very carefully. 4. We compared products and prices before making a decision. 5. Consumer credit provided cash, goods and services. 6. In 1990, consumers purchased over 60 percent of the GNP – more than $3 trillion in goods and services.

11. Ask questions to the following sentences:

Model: Almost everyone was covered by some form of insurance.

Who was covered by some form of insurance?

1. A direct relationship between the kinds of goods and services bought and the income of the purchaser was shown by a Prussian statistician by the name of Ernst Engel, back in the 19th century. 2. As consumers, all of us were limited by what we can spend. 3. Most of the nations' personal savings were held by the commercial banks, different types of savings institutions, and credit unions. 4. Consumers were tempted to spend money for products they did not really need. 5. Group policies were offered by employers, professional associations, unions, and other organizations to their employees or members. 6. At the end of the specific number of years the full amount was paid to the policyholders.

12. Translate into English:

1. Гроші були покладені на банківський рахунок. 2. Кількість речей, які ми спроможні були купити, залежала від розміру нашого прибутку. 3. Ваші гроші були захищені від пожежі, крадіжки та інших нещасних випадків банками та ощадними установами. 4. Земля та інші природні ресурси були закуплені бізнесменами в надії на прибуток. 5. Майже всі члени нашої родини були застраховані.

13. Communicative situations:

1. As total consumption in the United States has gone up, the percent spent on different types of goods has changed. Spending for some goods has increased while that for others has decreased. Explain the trends for each of the following goods:

a) Spending as a percent of total consumption has decreased for good, clothing, household operation.

b) Spending as a percent of total consumption has increased for housing, medical care, transportation and travel.

2. Two hundred families live in the village of Middleville. Every year, for as long as anyone can remember, there has been one burglary. The average loss from the thefts has been $5,000.

а) How could the people of Middleville insure themselves against the financial costs of a burglary?

b) Why is insurance often described as a «method of sharing risk»?

3. Most states require drivers to have liability insurance. Why? You can choose whether you want collision insurance for a car. Why would someone choose not to buy collision insurance? Under what circumstances might you want to buy collision insurance?

Unit 4 LAUNCHING A BUSINESS

1. Read and memorize the following words, word-combinations and word-groups:

to start a business (syn. to launch a business) – розпочати справу (бізнес)

e.g. Those thinking of starting a business should keep informed about the kinds of opportunities that exist, the personal qualities needed for success and the kinds of training available to prepare for the world of business.

to operate a business – керувати справою (бізнесом)

e.g. Many colleges now offer programs that teach students how to start and operate a business.

to face a problem – стикатися з проблемою

e.g. Small businesses face many problems.

to risk (syn. to run the risk) – ризикувати

e.g. Corporate leaders may risk their own jobs when they make major decisions that affect the future of corporation negatively.

sole proprietorship – одноосібне володіння

e.g. A sole proprietorship is a business owned by one person.

to pay taxes – сплачувати податки

e.g. Sole proprietors have minimal legal restrictions and do not have to pay the special taxes placed on corporations,

to assume the debts – брати на себе сплату боргів

e.g. If a business fails, the owner must personally assume the debts.

stockholder– акціонер, власник акцій

e.g. Ownership of a corporation is represented by shares of stock, and for that reason corporate owners are known as stockholders.

partnership – товариство, компанія

e.g. A partnership is a business organization that is owned by two or more persons.

2. Give English equivalents of the following:

приймати рішення, товариство, стикатися з проблемою, нестача чогось, мати успіх, одноосібне володіння, сплачувати податки, керувати бізнесом, акціонер, брати на себе сплату боргів, досягти успіху, ризикувати

3. Fill in the blanks with appropriate words: experience, creditors, managers, business, companies, a sole–proprietorship, a partnership, owner, stockholders.

1. About 50 percent of entrepreneurs start their ... in industries in which they have some … .

2. People who come from families whose members were in business themselves are more likely to start their own ... .

3. In a large business the tasks of organizing and operating are done by many hired ...

4 .... is a business owned by one person.

5. All debts and all problems associated with the business belong to the… .

6. ... is a business organization that is owned by two or more persons.

7. If the business were to fail, its ... would have the right to recover their money from any, or all of the partners.

8. Ownership of a corporation is represented by shares of stock, and for that reason corporate owners are known as ….

4. Read and translate the text:

There are numerous reasons that make people think about owning a business of their own. Personal independence, unlimited profit potential, the opportunity to work at something that they really love and at hours they choose are some of the reasons people have given for trying entrepreneurship. Many business leaders begin their careers as entrepreneurs after four years of undergraduate college training and even additional graduate school training. Others become successful entrepreneurs without special training.

Many colleges now offer programs that teach students how to start and operate a business. Basic information is combined with hands-on experience and the advice of successful business consultants. These programs help potential entrepreneurs decide whether their own ideas are good and how to follow through with them. With the high rate of business failure, this approach can prevent personal financial losses.

A common way to learn about a business, and the opportunities for starting one similar to it, is to learn while working for someone else. It provides a source of steady income to people while they are planning to start their own businesses. About 50 percent of entrepreneurs start their businesses in industries in which they have some experience.

Evidence shows that people who come from families whose members were in business themselves are more likely to start their own companies. Unfortunately, the record shows that two out of three new businesses fail within their first four years.

Small businesses face many problems. Bad economic times affect small business more than they do big business. In addition, small business profits tend to fall faster, and small businesses are more likely to fail.

What are the problems that face small business now? In January, 1985 the National Federation of Independent Business reported that the four top problems facing small business at that time were taxes, slow sales, the high cost of borrowing money and competition from other businesses.

In a large business the tasks of organizing and operating are done by many hired managers.

A corporation is one kind of business organization. Other kinds of business organizations are sole proprietorships and partnerships. Sole proprietorships are the most numerous kind of business organization, but most are very small. The reason for their popularity is that they are the easiest and least costly to organize.

Sole proprietors own all the profits of their enterprises, and they are their «own bosses», free to make whatever changes they please. They have minimal legal restrictions and do not have to pay the special taxes placed on corporations. Sole proprietors also have opportunity to achieve success and recognition through their individual efforts.

There are also disadvantages. A very serious one is the unlimited liability that each proprietor faces. All debts and all problems associated with the business belong to the owner. A second disadvantage of the sole proprietorship is that it has limited capital. The money that a proprietor can raise is limited by the amount of his or her savings and ability to borrow. Also, when the owner dies, the business dies. Other disadvantages may include lack of opportunities for employees, limitations of size and lack of management resources.

A partnership is a business organization that is owned by two or more persons. Partnerships offer certain advantages over sole proprietorships:

· Partners bring additional funds to a proprietorship.

· Partners can bring fresh ideas and talents to business organizations.

· Like the sole proprietorship, partnerships are relatively easy to form and are not subject to special taxation. Partnerships have the following disadvantages:

· In many cases, each of the partners is subject to unlimited liability. Partners are individually responsible for all the debts of the business. In other words, if the business were to fail, its creditors would have the right to recover their money from any, or all, of the partners.

A corporation is a business organization created under a government charter. Ownership of a corporation is represented by shares of stock, and for that reason corporate owners are known as stockholders. One feature of the corporation is that the courts treat it as a legal «person». It can, for example, sue or be sued and enter into contracts, and it must pay taxes.

There are some other types of business organizations. They are: the corporation for small business, not-for-profit corporation, government-owned corporations, cooperatives and franchises.

5. Answer the following questions:

1. What makes people think about owning a business of their own?

2. How do many business leaders begin their careers as entrepreneurs?

3. What helps potential entrepreneurs to start and operate a business?

4. What problems do small businesses face?

5. Who does the tasks of organizing and operating in a large business?

6. What kinds of business organizations you know?

7. What are the advantages and disadvantages of sole proprietorship, partnership and corporation?

8. What other special types of business organizations do you know?

6. Define the terms:

sole proprietorships, partnerships, corporations, creditors, stockholders, dividends, taxes.

7. Translate Into English:

1. Підприємці – це люди, які мають власний бізнес і керують ним, сподіваючись одержати прибуток. 2. Тепер багато вищих навчальних закладів пропонують програми, які вчать студентів, як розпочати бізнес і керувати ним. 3. Близько 50 відсотків підприємців розпочали свою справу (бізнес) у тих галузях виробництва, в яких вони вже мали певний досвід. 4. У великому бізнесі завдання, пов'язані з організацією та управлінням, виконуються багатьма найманими менеджерами. 5. Великий і малий бізнес для досягнення своєї мети організовують свою роботу по-різному. 6. Акціонерне товариство, одноосібне підприємство – це різні види бізнесових організацій. 7. Одноосібне підприємство – це бізнес, яким керує одна особа.

8. Read and dramatize the following dialogue:

Nick.: Hello, Peter. It's so nice to see you. How are you getting on?

Pete.: Quite all right, thank you. And what about you? Haven't seen you for a long time. What have you been busy with?

N.: I've been pretty busy. In fact I want to talk to you about my business.

P.: Oh, I'll be glad to do something for you.

N.: I'm glad you are not in a hurry and we have time to talk today.

P.: Sure.

N.: Well, Pete. I need some legal advice. John and I are thinking of incorporating. We are going to expand.

P.: Really? It sounds interesting. It means that your partnership has been doing very well.

N.: Oh, yes, we have a success. Now some businessmen are interested in investing with us.

P.: Let me get this straight. You want to issue and sell stock in exchange for investment capital, don't you?

N.: Exactly. By the way, does a corporation have limited liability?

P.: It does. Unlike the owners of sole proprietorships and partnerships who can be held personally liable for the debts of their firms the most that corporate shareholders can lose (i.e. their liability) is limited to whatever they paid for their shares of stock. Corporations are so important because of the advantages they offer over sole proprietorships and partnerships.

N.: Tell me a little about these advantages.

P.: Well. Stockholders can enter or leave a corporation at will simply by buying or selling shares of stock in that corporation. When the corporate stockholders die, their shares of stock are passed on to their heirs. Meanwhile, the corporation is free to conduct business as usual. In certain instances individuals can reduce their tax liability by incorporating.

N.: With all these advantages I wonder why there are so many more unincorporated businesses than incorporated ones.

P.: The answer has to do with the disadvantages of the corporation.

N.: Disadvantages? What can you tell me about them?

P.: It's 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 by forming proprietorships and partnerships. Corporations are subject to special taxes. The federal government, along with many state and local governments, taxes corporate income in addition to the taxes paid by shareholders on their dividends.

N.: What does «dividends» mean?

P.: Dividends are the portion of a corporation's profit that are distributed to the stockholders.

N.: Thank you. What other things should I know?

P.: Well, Corporations whose stock shares are sold to the public give up their right to privacy. The law requires that these large, open (or public) corporations disclose information about their finances and operations to anyone interested in reading about them. The purpose of this legislation is to give people information that helps investors and may also be of value to the competition. For that reason some corporations have chosen to remain closed (or private) corporations rather than disclose information they would prefer to keep secret. Now you seem to know a lot about business.

N.: Not everything yet and the subject becomes quite technical.

P.: I'm glad to hear it. It's time to go now. See you later!

N.: Thank you very much for the information. Bye!

9. Make up your own dialogue using the following expressions:

to distribute profits and losses, to make a right choice, to attract customers, to go into business, an amount of money, to get along with, to run a risk, to be liable.

10. Inform the group about the future activities or states:

Model: I have the right to expect uniform product quality.

I shall have the right to expect uniform product quality.

1. Many colleges offer programs that teach students how to start and operate a business. 2. I know a lot about this business. 3. This program helps potential entrepreneurs decide whether their own ideas are good and how to follow through with them. 4. About 50 percent of entrepreneurs start their own business in industries in which they have some experience. 5. Evidence shows that people who come from families whose members were in business themselves are more likely to start their companies. 6. Many business leaders begin their careers as entrepreneurs after four years of undergraduate college training (and even additional graduate school training).

11. Ask for confirmations of the truth of the following statements:

Model: You will call on us tomorrow.

You will call on us tomorrow, won't you?

The manager will not answer my questions on Saturday.

The manager won't answer my questions, will he?

1. A consumer will have the right to expect uniform product quality. 2. Voting won't take place at a corporation's annual meeting. 3. Small businesses will face many problems.4.Large and small businesses will organize in different ways to meet their objectives. 5. Sole proprietors won't have to pay the special taxes placed on corporations. 6. I shan't know a lot about this business.

12. Translate into English:

1. Батьки сподіваються, що він стане гарним підприємцем, матиме власний бізнес і керуватиме ним. 2. Вона вже має чудовий досвід у цій галузі виробництва i, можливо, розпочне власну справу. 3. Як менеджер, він буде виконувати завдання, пов'язані з організацією та управлінням виробництвом. 4. Ми знаємо, що корпорація завжди матиме переваги над одноосібною власністю та партнерством. 4.Рада директорів обере президента та інших посадових осіб для керівництва компанією.

13. Communicative situations:

1. Would you like to own your business? Why yes or why not? If so, would you prefer to buy an existing business or start from scratch? Explain.

1. What product or service would you provide?

1. What talents, interests, skills and abilities do you have, or likely will have, which would make you successful in this business?

1. Where would you want to locate the business and for what reasons?

1. What type of business organization would you prefer? (sole proprietorship, partnership, corporation)? Explain your choice.

2. Do you have the personal characteristics that might help you become a successful entrepreneur? Read each question on the Rating Scale. Place a check mark on the line above at the point where you believe successful entrepreneurs would rate themselves. Repeat the exercise for yourself by placing an «X» closest to the answer that best describes you. The check mark need not be placed directly over one of the suggested answers if your rating lies somewhere between two answers. Be honest with yourself.

Are you a self-starter?

a) I do things my own way. Nobody needs to tell me to get going.

b) If someone gets me started, I keep going all right.

c) Easy does it. I don't put myself out until I have to.

How do you feel about other people?

a) I like people. I can get along with just about anybody.

b) I have enough friends and I don't need anybody else.

c) Most people bug me.

Can you take responsibility?

a) I like to take charge and see things through.

b) I'll take over if I have to, but I'd rather let someone else be responsible.

c) There's always some eager beaver around waiting to show off, I say, let him.

How good an organizer are you?

a) I like to have a plan before I start. I'm usually the one who lines things up.

b) I do all right unless things get too complicated. Then I lose interest.

c) I just take things as they come.

How good a worker are you?

a) I can keep going as long as necessary. I don't mind working hard.

b) I'll work hard for a time, but when I've had enough, that's it.

c) I can't see that hard work gets you anywhere.

Can you make decisions?

a) I can make up my mind in a hurry if necessary, and my decision is usually O.K.

b) I can if I have plenty of time. If I have to make up my mind fast, I usually regret it.

c) I don't like to be the one decides things. I'd probably blow it.

Can you stick with it?

a) If I make up my mind to do something, I don't let anything stop me.

b) I usually finish what I start.

c) If a job doesn't go right, I turn off. Why beat my brains out?

Can you keep records?

a) Since they are needed I'll keep records even though I don't want to.

b) I can, but it's more important to get the work out than to shuffle numbers.

c) I would rather hire someone to keep records for me.

Unit 5 FINANCING A BUSINESS

1. Read and memorize the following words, word- combinations and word-groups:

internal funds – внутрішні борги

external funds – зовнішні борги

e.g. Since the funds come from within the firm they are described as internal funds. The rest must come from outside or external funds.

to meet one's expenses – покривати чиїсь витрати

e.g. As a firm sells its products or services, it receives money which it uses to meet its expenses.

depreciation – знецінення, зниження цін

to wear out – зношуватися, спрацьовуватися

e.g. Depreciation represents the cost of replacing assets that wear out.

to cover the cost of smth – покрити вартість чого не будь

e.g. Businesses use internal funds to cover the cost of depreciation,

short-term loans – короткострокова позика e.g. Short-term loans are used to finance the everyday costs of doing business.

long-term loans – довгострокова позика

e.g. Long-term loans mature (come due) in more than a year.

the principal – запозичена сума

e.g. Creditors expect to receive interest and the return of the principal at the end of a specific period of time.

common stock – спільні акції.

preferred stock – привілейовані акції

e.g. All corporations issue common stock; some, however, also issue preferred stock.

to have voting rights – мати право голосу

e.g. Preferred stockholders do not have voting rights.

security exchange – фондова біржа

e.g. Security exchange is a market where brokers meet to buy and sell stocks and bonds for their customers.

default – невиплата, невиконання договору e.g. There is some risk of default on the bonds of even the strongest corporations.

mutual funds – спільні фонди

e.g. Mutual funds are corporations that self stock and use the proceeds to invest or speculate in the securities markets.

balance sheet – балансовий звіт.

income statement – звіт про прибуток

e.g. Two of the most important pieces of information contained in every prospectus and annual report are the balance sheet and the income statement.

assets – актив (балансу)

liabilities – пасив (балансу), борги, заборгованість

e.g. For every business the things that it owns are assets, and those it owes are liabilities.

net worth – вартість майна за винятком зобов'язань, власний капітал підприємства.

e.g. The difference between assets and liabilities is its net worth.

2. Give English equivalents of the following:

покрити вартість чого-небудь, фондова біржа, пасив(балансу), балансовий звіт, довгострокова позика, невиплата,запозичена сума, привілейовані акції, актив (балансу), внутрішні борги, мати право голосу

3. Fill in the blanks with appropriate words: investors; capital; money; net worth; customers; bonds; a security exchange; long-term financing.

1. … is the difference between assets and liabilities.

2. Similarly, firms need ... to begin operation, to meet their day-to-day expenses and to expand.

3. ... charge purchases to their accounts for payment at a later date.

4. ... is money that will be used for a year or more.

5. Many large corporations raise long-term capital through the sale of their ... .

6. Corporations sell stocks and bonds as a way of raising ... .

7. ... is a market where brokers meet to buy and sell stocks and bonds for their customers.

8. Those who buy stocks to share in the profits and growth of a corporation over a long period of time are described as ... .

4. Read and translate the text:

Most of the money used by business comes from the sale of its products and services. Since these funds come from within the firm they are described as internal funds. The rest must come from outside or external funds.

As a firm sells its products or services, it receives money, which it uses to meet its expenses. One of these expenses, depreciation, represents the cost of replacing assets (like tools, machinery, and buildings) that wear out. Typically, businesses use internal funds to cover the cost of depreciation.

Business loans are generally classified as either short-term or long-term loans. For short-term loans, the principal (the amount borrowed) must be repaid within one year. Long- term loans mature (come due) in more than a year.

Short-term loans are used to finance the everyday costs of doing business, such as payrolls, raw materials and merchandise. Long-term loans are more likely to be used to purchase equipment, buildings and other high cost items.

All corporations issue common stock; some, however, also issue preferred stock. Unlike common stockholders, preferred stockholders usually do not have voting rights.

A security exchange is a market where brokers meet to buy and sell stocks and bonds for their customers.

The largest of the securities exchanges are the New York Stock Exchange and the American Stock Exchange.

There is some risk of default (failure to pay interest or principal) on the bonds of even the strongest corporations. For this reason many people invest in mutual funds. Mutual funds are corporations that sell stock and use the proceeds to invest or speculate in the security markets.

Two of the most important pieces of information contained in every prospectus and annual report are the balance sheet and the income statement. The balance sheet summarizes a corporation's assets, what it owns; its liabilities, what it owes; and its net worth, the difference between the two sums at a given time. The income statement summarizes a firm's revenues, costs, and the difference between the two (the profit or loss) over a period of time.

5. Answer the following questions:

1. Where does most of the money used by business come from?

2. What do we call internal funds?

3. What does depreciation represent?

4. What remains after paying expenses?

5. How do you understand the term «external funds»?

6. What can the firm do to get more money?

7. What rights have common stockholders?

8. What is the difference between common and preferred stockholders?

9. What is the reason for investing in mutual funds?

10. How do you read a balance sheet and income statement?

6. Define the terms:

preferred stock, depreciation, mutual funds, to have voting rights, internal funds, common stock, balance sheet, the principal.

7. Translate into English:

1. Найбільша кількість грошей, що використовується бізнесом, надходить з продажу продукції та різних послуг. 2. Оскільки фірма продає товари або послуги, вона одержує гроші та використовує їх з метою покриття своїх ви­трат. З, Бізнесові позики зазвичай класифікуються як довгострокові та короткострокові. 4. Короткострокові позики використовуються для фінансування повсякденних вартостей для створення фірми (справи), таких як платіжні відомості, сировина, товари. 5. Довгострокові позики існують для купівлі обладнання, будинків та інших цінних предметів. 6. Фондова біржа це ринок, де зустрічаються посередники для купівлі й продажу акцій та облігацій своїм клієнтам. 7. Чи існує певний ризик невиплати за облігаціями найсильніших корпорацій? 8. На відміну від власників спільних акцій, власники привілейованих акцій не мають права голосу. 9. Спільні фонди це корпорації, що купують акції та використовують виручені суми для інвестування або гри на фондових біржах. 10. Звіт про прибуток підбиває підсумки річного прибутку, вартості фірми та різниці між прибутком і збитком.

8. Read and dramatize the following dialogue:

Т.:Do you know anything about John Say and his works?

S.: As far as I remember, an admirer of Adam Smith, John Baptiste Say's «Treatise on Political Economy» (1803) helped to introduce «The Wealth of Nations» to his native France. In the course of explaining Smith's theories and the role of markets in satisfying human wants, his statement came to be known as Say's Law.

T.: So, according to Say's Law, «production creates its own demand», in other words, people produce and sell goods and services in order to buy the things they want.

S.: No doubt. And if buyers no longer want certain products, sellers will stop producing them and shift into something that is in demand.

T.: Now, if only those goods and services actually in demand are produced, and the income received from the sale of those products is ultimately used by managers and workers to buy the things they want and need, it follows that supply created its own demand.

S.: Can we say in other words: there could be no such thing as overproduction, or long-term unemployment?

T.: Temporary overproduction and unemployment, yes. Long term, never. When was Say's Law put to rest?

S.: The onset of the Great Depression of the 1930-s with its widespread unemployment and overproduction that dragged on for years, finally put Say's Law to rest.

T.: Although some economists continued to agree with Say that «in the long run», the market would bring supply, demand and unemployment into balance, most agreed with the British economist J.M. Keynes who pointed out that «in the long run we are all dead».

S.: By that he meant pressing problems require immediate attention. Besides they couldn't wait for long-term solutions.

9. Make up your own dialogue using the following expressions:

to meet one's expenses, depreciation to cover the cost of smth, long-term loans, the principal, to have voting rights, security exchange, mutual funds, overproduction, to be in demand

10. Make the following sentences passive:

Model: A firm will use this amount of money to meet its expenses next week.

This amount of money will be used to meet expenses of a firm next week.

1. This business will use internal funds to cover the cost of depreciation. 2. A firm will sell its products and services soon. 3. He will use short-loan terms to finance the everyday costs of doing his own business tomorrow morning. 4. The firms will produce these goods and services which are in demand in two days. 5. The couple will buy the things they want and need in this supermarket tomorrow.

11. Translate the verbs in brackets in English using them in the necessary tense-form:

1. The principal (буде виплачено) by this business within a year. 2. When the funds come from within the firm they (будуть описані) as internal funds. 3. Long-term loans (будуть використані) to purchase equipment, buildings, etc. 4, In this case demand (буде створений) by supply. 5. Stock (буде продано) by mutual funds and the proceeds (буде використано) to invest or speculate in the security markets.

12. Translate into English:

1. Коли борги надходитимуть із зовнішніх джерел, вони будуть описані як зовнішні борги. 2. Для чого будуть використані короткострокові та довгострокові позики? 3. Відсотки та запозичена сума будуть отримані кредиторами наприкінці терміну. 4. Акції будуть продані корпораціями для використання грошей на фондових біржах.

13. Communicative situations:

1. Imagine that you have a great idea for a new popcorn popper. Explain how you would go about raising capital to develop your idea, manufacture and market your product?

2. There is a saying, «Neither a borrower nor a lender be». Explain why you agree or disagree with this advice with regard to business in our market economy.

3. Scanning the financial section of the newspaper, you notice that the price-earnings ratio of excellent bank stock range from 5 to 7, while other company stocks had Р-E rations over 100.

How do you explain this wide variation?

Unit 6 PRODUCTION AND MARKETING.

THE BUSINESS OF BUSINESS

1. Read and memorize the following words, word-combinations and word-groups:

standard of living - рівень життя

e.g. A nation's standard of living is measured by the amount of goods and services available to its citizens.

productivity - продуктивність праці

e.g. When you produce more or better products with the same time and resources, you have achieved a productivity increase.

input - витрати

e.g. Input can be any resource that goes into the production process.

output - продуктивність, випуск продукції

e.g. Productivity is usually measured in terms of output per worker per hour.

division of labor - розподіл праці

e.g. To use machinery efficiently, producers must use division of labor.

skilled workers - кваліфіковані робітники

e.g. Skilled workers perform their tasks more efficiently than those who are unskilled.

consumption - споживання

e.g. Everything that takes place between production and consumption falls into the category of marketing.

2. Give English equivalents of the following:

рівень життя, продуктивність праці, піднесення і витрати, спад, рекламувати, страхування, брати участь у чомусь, розподіл праці, добробут, випуск продукції, оптова торгівля.

3. Fill in the blanks with appropriate words: a market; standard of living; technologies; promotion; productivity; firms capacity; employers; goods and services.

1. ... is a measure of how efficiently we work.

2. New ... can be used by business to improve productivity has decreased.

3. A nation's ... is measured by the amount Promotion

4. of goods and services available to its citizens.

5. ... is a key part of marketing because it is the way business get their messages to consumers.

6. Societies obtain ... either by producing them themselves or by trading what they produce.

7. ... is where buyers and sellers come together.

8. ... is the maximum number of units it can produce.

9. ... are able to employ the optimum number of workers and productivity increases.

4. Read and translate the text:

A nation's standard of living is measured by the amount of goods and services available to its citizens. One way to calculate living standard is to divide total production (the gross national product) by the population (Production % Population = per capital GNP). When production is increasing faster than the population, more goods and services are available per person, and living standards are likely to improve. Productivity is a measure of how efficiently we work. To measure productivity, economists determine the amount of goods and services produced for every unit of input. Input can be any resource that goes into the production process. Productivity is usually measured in terms of output per worker per hour. Among the principal ingredients of productivity are the education and training of workers. Well-educated and skilled workers perform their tasks more efficiently than those who are unskilled or poorly educated.

Another ingredient in productivity is the enthusiasm workers have for their jobs. Those who like their jobs and feel they gain dignity and respect from the work will produce more than those who lack motivation to do their best. To use machinery efficiently, producers must also use division of labor - the practice of breaking down large, complex tasks into a series of small ones so that each worker can become an expert in his or her particular task. To an economist, everything that takes place between production and consumption falls into the category of marketing. Marketing, then, includes the activities that bring the buyer and seller together. Marketing includes buying and selling, transporting and storing, product planning, market research, product support, customer service, financing, insuring and other activities.

5. Answer the following questions:

1. What is a nation's standard of living measured by?

2. When are living standards likely to improve?

3. What is «input»?

4. What does the quality of labour force depend upon?

5. What is a key part of marketing?

6. What is the final part of marketing?

6. Define the terms:

production process, productivity, division of labour, skilled worker, consumption, standard of living, input, market research

7. Translate into English:

1. Один спосіб визначення рівня життя – це поділити всю продукцію на кількість населення. 2. Коли кількість продукції зростає швидше за кількість населення, рівень життя поліпшується. 3. Витратами можуть бути будь-які кошти, що використовуються у виробничому процесі. 4. Освіта та навчання робітників є головною складовою частиною продуктивності праці. 5. Люди, які люблять свою роботу та одержують насолоду від неї, виробляють більше за тих, які не мають такої мотивації. 6. Чого бракує некваліфікованим і неосвіченим робітникам для більш ефективного виконання своїх завдань? 7. За допомогою розподілу праці кожний робітник може стати майстром своєї справи. 8. Маркетинг - це купівля та продаж, транспортування, збереження, фінансування, страхування та інше.

8. Read and dramatize the following dialogue:

B. : When did modern production methods take a giant leap forward, I wonder?

C. : Modern production methods took a giant leap forward in 1913 when Henry Ford (1863–1947) introduced the use of the assembly line in the production of automobiles. In those days, automobiles were built in much the same way as a house.

В.: What do you mean?

C.: That is workers simply picked a spot on the factory floor and assembled the car from the bottom up. As business grew Ford began manufacturing many of the component parts formerly purchased from suppliers. Typically the components were put together by one worker who performed all the operations necessary to assemble them.

B. : The method was likely to be costly, and so only the wealthy could afford to buy automobiles in those days.

C. : For sure. This did not please Henry Ford who wanted to bring the price of automobiles down to the point where most families could afford them.