TEXT 1. FACTORS AND LOCATION OF PRODUCTION

TEXT 1. FACTORS AND LOCATION OF PRODUCTION

The resources that go into creation of goods and services are called the factors of production. There are three factors of production: labour, land and capital.

     But there must be some person or persons who will organize these factors so that production takes place. Someone must make decisions what to produce (the type of good or service and the quantity), how to produce (methods of production), where to produce (location of production). Whoever makes the decision is known as the entrepreneur and sometimes considered as the forth factor of production. The reward to entrepreneurs is the money that remains after the owners of land, labour and capital have received their payments.

Notes on the text

1. Give Russian equivalents.

2. Give English equivalents.

3. Agree or disagree. Correct wrong statements.

4. Answer the questions on the text.

Grammar exercises

1. Insert prepositions.

2. Fill in the blanks with the Vocabulary on the text.

3. Translate the following sentences from English into Russian.

4. Insert the pronouns some, any, no into the following sentences. Translate the sentences from English into Russian.

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           TEXT 2. DEMAND AND SUPPLY

               Demand is a consumers willingness and ability to buy a product or service at a particular time and place.

               Demand and supply are the key concepts in both macroeconomics and microeconomics.

               In macroeconomics demand is the function of income and supply (or aggregate supply is a function of expected sales to consumers, businesses and governments). And in microeconomics demand and supply are primarily a function of price.

           TEXT 3. CAPITAL

               Economic analyses traditionally divides factors of production into three categories: labour, land and capital. The first two of these are called primary or original factors of production available before production takes place. To them we add a produced factor of production, capital or capital goods.

               Capital consists of those durable produced goods that are in turn used as productive inputs for further production. Some capital goods might last a few years while others might last for a century or more. But the essential property of capital good is that it is both an input and an output.

               There are three main categories of capital goods: structures (such as factories and homes), equipment (consumer durable goods like automobiles and producers durable equipment like machine tools) and inventories (such as cars in dealers lots).

               Originally capital appears in a monetary form. The function of money capital is to create necessary conditions for production of material welfare. The next form is production capital. Its function is rational use of factors of production and manufacture of goods possessing value. The third form is trade capital whose function is in selling finished goods thus converting of trade capital into money. At this stage realized surplus value is converted into profit of an entrepreneur.

           TEXT 4. INVESTMENTS

               An addition to the circular flow of income is called an injection. Such additions will increase the level of activity in the economy. One of the ways in which funds can flow into an economy is through investment.

               Investment is expenditure on productive capital goods, that is, goods which can be used to produce other goods and services. Thus, investment is expenditure on factories, machinery and other physical assets.

               Investment can be categorized into net investment and gross investment.

               Net investment is the one which actually increases the nations stock of capital goods and enables the economy to grow. However, at least a little investment is necessary to replace capital stock that is worn out or obsolete. This loss of value of assets is called depreciation. When this replacement is added to the net investment the total achieved is termed as gross investment.

           TEXT 5. DEMAND AND SUPPLY

           Demand is the quantity of a good that buyers wish to buy at each price. Other things equal at low prices the demanded quantity is higher.

           Supply is the quantity of a good that sellers wish to sell at each price. Other things equal, when prices are high, the supplied quantity is high as well.

           The market is in equilibrium when the price regulates the quantity supplied by producers and the quantity demanded by consumers. When prices are not so high as the equilibrium price, there is excess demand (shortage) raising the price. At prices above the equilibrium price, there is excess supply (surplus) reducing the price.

           There are some factors influencing demand for a good, such as the prices of other goods, consumer incomes and some others.