Facilities of production and needs of society.
To produce the amount of tangible and intangible goods necessary for society, one should spend a great deal of different resources (natural, human, financial etc.), that are called economic resources.
The necessity of people to have definite gods and services are called needs. Needs are variable, they can also be classified according different criteria:
- needs in means of existence – goods, satisfying human bare necessities (food, clothes, dwellings etc.);
- needs in social and cultural means of life – education, leisure etc.;
- needs in means of activity – objects for production of goods and services;
- needs in satisfaction of social-prestigious goods – tourist services, luxuries.
An increase and a constant change of needs (their structure, quality and quantity) is observed alongside the development of society. During every ten years the quantities of types of goods and services enlargers more than twice at a simultaneous increase of the quantity of consumption of goods. Needs are increasing in quantitative and even more in qualitative respect. This is expressed in the law of the increase of needs.
The increase of needs and their change provoke a stimulus to the production of goods aimed at satisfaction of human needs.
- Economic interestis a deliberate necessity of the participants of market relationships, a moving force of their actions in the sphere of production and distribution of goods and services.
- Bearers of economic interests –individuals and legal entities.
e) Conflicts of interests can appear in different forms. The reasons of such conflicts are different level of the forces of production, system of economic relations, differences in the forms of property, social and economic heterogeneity of different forms of labor, breakage of objective economic laws, voluntarism etc.
Economic resources and factors of production. Classification of and characterization of resources.
Economic resourcesare substances or definite factors of production, used for the production of goods and services. Resources are different and their classifications are different:
- natural,or the deposits of minerals, that society possesses or natural conditions of life (favorable for agriculture, favorable geographic location);
- human –with people’s experience, qualification, level of education and entrepreneurial abilities;
- Created and perfected by previous generationsfor production activity and consumption, i.e. real enterprises, transport systems, housing etc.
- Money, currency in gold, financial etc.
All types of resources that are at mankind’s disposal, resources of definite countries, firms, families are limited in qualitative and in quantitative respect. This is the principle of scarcity of resources. Hummel labour is limited by their number and their ability to work, by working hours etc.
Scarcity of resources provokes scarcity of facilities of production. Facilities of production are ensured by means of the best joining of factors of production, existing choice up to the alternative one. The problem of choice provokes three main questions of the market: “What?”, “How?” and “For who?”. Defining its essence we are guided by market conditions, define the aim, choose means of its achievement and estimate the outcomes of our activity.
Human wants are virtually unlimited whilst the resources to satisfy our wants are limited. The most pressing wants are food, housing, clothing and warmth. They have to be satisfied first. Advances in technology, however, have added new wants and brought about new ways of satisfying existing wants. For example, our wants for cars and television sets were unknown to previous generations and the wants to travel, regarded as difficult in the past, can be satisfied easily because of many different types of transport.
At any time people in different countries of the world can produce only a limited amount of goods and services because the available resources are limited, or scarce. These resources or factors of productionas they are often called are of four types: land, labor, capital and entrepreneurial abilities.
Land and raw materials:Natural resources. They are inputsinto production that are provided by nature. The world’s land area is limited, as are its raw materials: water, natural gas, oil, trees (all the stuff we find on, in, and under the land)
Labor: all forms of human input, both physical and mental,into production. The labor force is limited both in number and in skills. Labor is a conscious, purposeful human activities, in the process of which people change outer nature, regulate exchange of goods and change their surroundings. In the course of the process people achieve their aim that defines the way and a character of actions and to which they subordinate. This is the fact that distinguishes labor from instinct actions.
Objects of laborare natural resources, influenced and transformed by people in the process of labor. They can be of two types: 1) given by nature; 2) the ones that are to be transformed – raw material.Means (instruments) of labor are instruments, used by people while transforming objects of labor.
Capital:all inputs that have themselves been produced, e.g.factories, machines, transportation and other equipment. All of them are also limited. Moreover, the productivity of capital is limited by the state of technology.
Entrepreneurship – Investment $$$ Investing time, natural resources, labor and capital are all risks associated with production. A person who joins land, capital and labor, undertakes risk for their use acts as an entrepreneur and is a fourth factor of production.
Theme № 3. The property and the economic systems.
wealth – богатство
set laws – устанавливать законы
govern – управлять
property rights – права собственности
variety – разнообразие
command economy – командно-административная экономика
market economy, or free enterprise, or laissez-faire – рыночная экономика
mixed economy – смешанная экономика
direction – направление, указание
supply – поставлять, снабжать
transmit – передавать
adjust – регулировать
equilibrium – равновесие
law enforcement – обеспечение соблюдения законов
fail – терпеть неудачу
social security – социальное обеспечение
justice – правосудие
government intervention – государственное вмешательство
market forces – рыночные силы (спрос и предложение)
demand curve – кривая спроса
supply curve – кривая предложения
quantity – количество
public good – общественный продукт
subsidize export industries – субсидировать экспортные отрасли
monetary policy – кредитно-денежная политика, монетарная политика
fiscal policy – налоговая, фискальная, бюджетная политика
Appropriation– присвоение, назначение, ассигнование
Property – собственность
Denationalization - децентрализация
Entrepreneurship - предпринимательство
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