I. Read and translate the text.
1. In a true market economy the government plays no role in the management of the economy, the government does not intervene in it.
2. The system is based on private enterprise with private ownership of the means or production and private supplies of capital which can be defined as surplus income available for investment in new business activities. Workers are paid wages by employers according to how skilled they are and how many firms wish to employ them.
3. They spend their wages on the products and services they need.
4. Consumers are willing to spend more on products and services, which are favored.
5. Firms producing these goods will make more profits and this will persuade more firms to produce these particular goods rather than less favored ones.
6. Thus, we can see that in a market economy consumers decide what is be produced.
7. Consumers will be willing to pay high prices for products they particularly desire.
8. Firms, which are privately owned, see the opportunity of increased profits and produce the new fashionable and favored products.
9. Such a system is, at first view, very attractive. The economy adjusts automatically to meet changing demands.
10. No planners have to be employed, which allows more resources to be available for production. Firms tend, to be highly competitive in such an environment.
11. New advanced products and low prices are good ways to increase sales and profits. Since all firms are privately owned they try to make the largest profits possible.
12. In a free market individual, people are free to pursue their own interests.
13. They can become millionaires, for example.
14. Suppose you invent a new kind of car. You want to make money out of it in your own interests.
15. But when you have that car produced, you are in fact moving the production possibility frontier outwards.
16. You actually make the 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 intervention.
17. Not surprisingly there are also problems.
18. Some goods would be underpurchased if the government did not provide free or subsidized supplies.
19. Examples of this type of good and service are health and education.
20. There are other goods and services, such as defense and policing, that are impossible to supply individually in response to consumer spending.
21. Once defense or a police force is supplied to a country then everyone in this country benefits.
22. A cornerstone of the market system is that production alters swiftly to meet changing demands. These swift changes can, however, have serious consequences.
23. Imagine a firm, which switches from labour-intensive production to the one where new technology is employed in the factory.
24. The resulting unemployment could lead to many social as well as economic problems.
25. In a market economy there might be minimal control on working conditions and safety standards concerning products and services.
26. It is necessary to have large-scale government intervention to pass laws to protect consumers and workers.
27. Some firms produce goods and then advertise heavily to gain sufficient sales.
28. Besides wasting resources on advertising, firms may also duplicate one another‘s services.
29. Rival firms providing roll services for example, could mean that two or more systems of rail are laid.
30. Finally, firms have to have confidence in future sales if they are to produce new goods and services.
31. At certain times they tend to lack confidence and cut back on production and the development of new ideas.
32. This decision, when taken by many firms, can lead to a recession.
33. A recession means less spending, fewer jobs and a decline in the prosperity of the nation.
Exercises II. Find the Russian Equivalents: New advanced products; products, which are favored; they try to make the largest profits possible; provide free or subsidized supplies; produce goods and then advertise heavily; a firm which switches from labour-intensive production to a new one; a decline in the prosperity of the nation; to create new jobs and opportunities; safety standards; to move the production possibility frontier outwards; to make the society better-off; to pass laws.
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III. Find the English Equivalents: процветание нации; управление экономикой; быстро меняться; широкомасштабное вмешательство правительства; принимать законы; автоматически изменяться (приспосабливаться); быть конкурентоспособным; частные фирмы; фирмы, принадлежащие государству и управляемые им; краеугольный камень; иметь серьезные последствии для; трудоемкое производство; сокращать производство; быть уверенным в …; не хватает уверенности в …; дорого платить за что-либо.
IV. Fill in the gaps with the words and expressions from the text: 1. The system is based on … with …of … . 2. Consumers are willing to spend more on. products and services, which … . 3. More profits will … more firms to produce those particular goods that are favoured. 4. In a market economy it is … who decide what is to be produced. 5. The economy … automatically to meet changing demands. 6. Firms tend to be highly … in such an environment. 7. In a free market individual people are free … . 8. You actually make …. by … even though you become a millionaire in the process, and you do it without … or … . 9. Some goods would be … if the government did not provide … supplies. 10. Some other goods and services, such as defense and policing, are impossible to … in response to consumer spending.
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V. Answer the questions: 1. What is a market economy? 2. What is the mechanism of. producing goods and services in a market economy? 3. In what way do changing demands affect production in a market economy? 4. What is the main difference between a market economy and a planned economy? 5. What are the advantages of a market economy ? 6. What are the disadvantages of a market economy?
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