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В. Finish the sentences according to the text

1. Markets bring together buyers and sellers who can meet either .... 2. A market can be defined as a ... . 3. Prices of goods and of resources influence ... .4. Economics studies ... . 5. If you want to have cheap lunch, ... . 6. If the cafe owner wasn't able to sell hamburgers at a profit, ... . 7. The student is working at the cafe because ... . 8. Prices have an influence on the decisions of ... . 9. Hamburger producers would be forced to raise prices if ... . 10. The allocation of scarce resources is influenced ....

15. Speaking

A. Tell your group-mates what you consider the main issues while speaking about:

• the importance of markets;

• the allocation of scarce resources;

• the influence of prices on the choices we make;

• the business of selling hamburgers.

16. Writing

If you were asked to write a short encyclopaedia entry on the role of the market, what would it be like?


A. You are now going to read part of a lecture about economic systems. As you read think of a suitable heading for each paragraph.

Economic Systems


This morning we're going to continue to look at the role markets and prices play. What we've said so far, if you remember, is that markets are arrangements through which prices influence how we allocate resources, scarce resources. To show how important this role is, ask yourself this question: how would resources be allocated if markets did not exist? If there were no markets? Well, let's have a quick look at tree kinds of economy to help us answer the question.

2) ________________

Let's first look at what we call the command economy. Now, this kind of economy is a society where the government takes all

the decisions. The government decides production and consumption. In practice, that means that a government office, a planning office, decides our three original questions. It decides what will be produced, how it will be produced and also for whom it will be produced. The same planning office then tells households, firms or companies and workers what it has decided.

3) ________________

Planning of this kind is obviously very difficult, very complicated to do. And the result is that there is no society which is completely a command economy. But in many countries, such as the former Soviet Union, there is a large amount of central planning and direction. The state owns factories, for example, and it also owns land. The state makes the most important decisions about what people should consume. It also decides how goods should be produced, and how much people should work.

4) ________________

Let's turn now to our second kind of economy. This is what we call a free market. Markets in which governments do not intervene are called free markets. Now, in a free market individual people, such as yourselves, are free to pursue their own interests. They can become millionaires, for example. The basic idea behind the free market is this: if you, for example, want to become a millionaire, what do you do? Well, let's say you invent a new kind of car. You want to make money out of it, in your own interests. But when you have that car produced, you are in fact moving the production possibility frontier outwards. You actually make society better off, by creating new jobs and opportunities, even though you become a millionaire in the process. And you do it without any government help or invention. Hong Kong is an example of a free market.

5) ________________

The third kind of economy we'll look at is what we call the mixed economy. And this means very much what it says. At one extreme we have the command economy, which doesn't allow individuals to make economic decisions — this is done centrally by the government. At the other extreme we have the free market, where individuals can pursue their own interests without any government restrictions. Between these two extremes lies the mixed economy. In a mixed economy, the government and the private sector interact in solving

economic problems. On the one side, the government controls a share of the output. It does this through taxation, transfer payments and providing services such as the police. But at the same time, though with restrictions, individuals are free to pursue their own interests. Most countries are mixed economies, though of course some are nearer to command economies that others. Others are closer to free market economies.

B. Give Russian equivalents to the following word combinations:

to decide production and consumption; a planning office; to be difficult to do; central planning and direction; markets in which governments do not intervene; to pursue one's own interests; the basic idea; to invent a new kind of car; to make money out of sth.; to move the production possibility frontier outwards; to make society better off; to become a millionaire in the process; this means very much what it says; the government and the private sector interact; on the one side; to control a share of the output; government restrictions.

C. Find conditional sentences in the lecture and state their types.
Translate the sentences.

D. Match the descriptions of economic systems with their names:

1. command economies;

2. market economies;

3. mixed economies.


a) In these societies most productive resources are owned by private individuals (as households or through business they own). Individuals make economic decisions in response to market signals and on the basis of their own preferences.

b) The economic system used in most countries lies between the two extremes of command and market economies. These economies answer the basic economic questions partly through the market and partly through government.

c) These economies rely almost totally on government to make economic decisions through centralized authorities. The government owns all the major productive resources. The former USSR and some other eastern bloc countries are examples of countries where government decisions were dominant.

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