Unit 3. The factors of production

1. Read the following words:

reason, consumer, incentive, efficiency, available, mea­sure, average, feature, obviously, employment, eligible, equal, decline, relationship, quantity, apparent, rela­tively, therefore

2. Read and translate the following groups of the words:

human effort, goods, and services, a factor of produc­tion, in " terms' of efficiency, additional considerations, the average number of hours, the size of the total popu­lation, full-time employment, legally controlled, an important determinant of the supply of labour, the gradual reduction, an extension of the annual holiday period, for the time being

3. Try to remember following words and word combination:

accompany (v.) - супроводжувати

additional (adj.) - додатковий

amount (n.) - кількість

annual (adj.) - щорічний

apparent (adj.) - явний

assume (v.) - стверджувати

available (adj.) – доступний, наявний

average (adj.) - середній

composition (n.) - склад

consideration (n.)розгляд

consumer (n.) – споживач

cost (n.) – собівартість; вартість

define (n.) – визначати

demand (n.) - попит

determinant (n.) – вирішальний, визначальний чинник

direct (v.) - навправляти, керувати

efficiency (n.) – продуктивність, ефективність

eligible (adj.) – придатний, відповідний

embrace (v.) - охоплювати

engage in (v.) – бути зайнятим в

extention (n.) - зріст

fall (n.) - падіння

firm (n.) - фірма

full-time employment – повна зайнятість

goods (n.) - товари

gradual (adj.) - поступовий

hence (adv.) - отже

human (adj.) - людський

incentive (n.) – спонука, стимул, намір

income (n.) – дохід, заробіток

important (adj.)важливий

labour (n.) робоча сила, праця

leisure (n.) – вільний час, дозвілля

mean (v.) - значити

measure (n.) - міра

mental (adj.) - розумовий

number (n.) - ряд, кількість

obviously (adv.) - явно

offer (n.) - пропозиція

output (n.) – випуск продукції

own (v.) - володіти

point (n.) - крапка

population (n.) - населення

price (n.) ціна

quantity (n.)кількість

raise (v.) - піднімати

range (n.) - діапазон

rate (n.) - ставка

reason (n.) - привід

reduction (n.) - скорочення

relationship (n.) - стосунки

relatively (adv.) - відносно

remuneration (n.) – оплата праці

rise (v.)- підвищувати

service (n.) - послуга

size (n.) - розмір

solely (adv.) - виключно

subject to (v.) – піддавати ч/н

supply (n.) - пропозиція

take into account – брати до уваги

take part (v.) – брати участь

term (n.) – термін, мова

treat (v.) - трактувати

wages (n.) - заробітна платня

4. Determine the part of speech of the word.

legal, necessary, solely, community, composition, retirement, extension, annual, apparent, attractive

5. Make nouns from the verbs:

direct, apply, cost, depend, fall, measure, offer, supply, operate, consider, compose, engage, retire, mean, reduce, decline, improve, increase

Text A

Labour

Labour is human effort — physical and mental — which is directed to the production of goods and services. But labour is not only a factor of production, it is also the reason why economic activity takes place. The people who take part in production are also consumers, the sum of whose individual demands provides the business person with the incentive to undertake production. For this reason when we are considering real-world economic problems it is necessary to treat labour somewhat differently from the other factors. There are social and political problems which have to be taken into account. For example, the question of how many hours per day a machine should be operated will be judged solely terms o£ efficiency, out­put, and costs. The same question applied to labour would raise additional considerations of individual freedom and human rights.

It must be born in mind that it is the services of labour which are bought and sold, and not labour itself. The firm cannot buy and own labour in the same way that capital and land can be bought and owned.

The supply of labour

The supply of labour available to an economy is not the same thing as the number of people in that community. The labour supply is a measure of the number of hours of work which is offered at given wages over some given period of time. It is determined, therefore, by the number of workers and the average number of hours each worker is prepared to offer. Both of these features are subject to change and, at any moment of time, they will depend upon a number of things.

1. The size of the total population. This is obviously very important because the size of the total popu­lation sets an upper limit to the supply of labour.

2. The age composition of the population. The age composition of a population takes accounts of the pro­portions in the different age groups. Two countries might have the same total populations, but very different age compositions and hence very different numbers in the working age groups.

3. The working population. In many countries the minimum age at which a person may engage in full-time employment is legally controlled. In the UK this is now 16 years and the normal age for retirement is 65 years (60 in the case of women). The age range 16 to 65 years (or 60 years) covers the working age groups, but, this does not mean that the total working population embraces all the people in these age groups.

The working population may be defined as the number of people who are eligible for work and offer themselves for employment.

4. The working week and holidays. The number of people who work (or are available for work) is an important determinant of the supply of labour, but so is the average number of hours each person works. The supply of labour provided by 20 people working for 40 hours is the same as that provided by 40 people working for 20 hours. Other things being equal, the shorter the working week, the smaller the supply of labour.

The gradual reduction in the working week has been accompanied by an extension of the annual holiday period. Again this amounts to a reduction in the supply of labour.

It must not be assumed, however, that a fall in the sup­ply of labour implies a reduction in the output of goods and services. In spite of the decline in the average number of hours worked by each person, output per worker has contin­ued to rise because of improved technology.

5. Renumeration. The relationship between quan­tity supplied and price is discussed at length later in this book, but for the time being it should be apparent that there will be a relationship between the amount of work offered and the price paid for that work. Generally speaking, when wage rates are relatively low, increases in wages will tend to lead to an increase in the supply of labour, but there comes a point when higher incomes make leisure more attractive. When incomes are relatively high, therefore high wage rates may reduce the amount of labour offered by the individual worker.

1. Read and translate text A.

2. Fill gaps using following words

incomes, price, directed, determinant, take part, reduc­tion, output, subject, labour, rates, relationship, supply, treat, account, number, increase, services

1. Labour is... to the production of goods and....

2. The people who... in production are also con­sumers.

3. It is necessary to... labour somewhat differently from the other factors.

4. There are social and political problems which have to be taken into....

5. Both of these features are... to change.

6. The... of people who work is an important... of the... of labour.

7. A fall in the supply of labour implies a... in the... of goods and services.

8. There is a... between the amount of work offered and the... paid for this work.

9. When wages... are relatively low, increases in wages will tend to lead to an... in the supply of....

10. Higher... make leisure more attractive.

3. Find synonyms among the words:

labour, арраrent, factor, obvious, work, to consider, supplementary, cost, freedom, amount, to offer, quantity, to change, different, determinant, price, additional, to take into account, liberty, to transform, various, to suggest

4. Find antonyms among the words:

employment, fall, leisure, late, same, low, short, high, dif­ferent, work, small, early, large, unemployment, rise, long

5. Make antonyms using prefixes:

necessary, efficiency, available, prepared, important, employment, legal, normal, equal

6. Translate following word combinations:

виробництво товарів та послуг, виробничий чинник, економічна діяльність, соціально-політичні проблеми, права людини, тим же шляхом, у будь-який момент, різні вікові групи, повна зайнятість, середня кількість годин, поступове скорочення робочого тижня, збільшення щорічної відпустки

7. G ive 3 forms of the verbs:

to direct, to provide, to undertake, to treat, to operate, to judge, to apply, to raise, to buy, to sell, to own, to offer, to give, to prepare, to change, to depend, to set, to engage, to control, to mean, to embrace, to define

8. Compose sentences using the following words:

1. is, labour, services, directed, the, to, of, production, and, goods.

2. who, the, are, people, take part, also, in, consumers, production, the.

3. of, both, features, are, these, to, subject, change.

4. things, they, will, a, depend, of, upon, number.

5. make, incomes, attractive, higher, more, leisure.

9. Fill gaps by prepositions:

1. The sum... these individual demands provides the busi­ness person... the incentive to undertake production.

2.... this reason it is necessary to treat labour somewhat differently... the other factors.

3. The question... how many hours... day a machine should be operated will be judged solely... terms... efficiency, output, and price.

4. It must be borne... mind that it is the services... labour which are bought and sold, and not labour itself.

5. The supply... labour available... an economist is not the same thing as the number... people... that com­munity.

6.... any moment of time, they will depend... a number... things.

7. The size... total population set an upper limit... the supply... labour.

8. The age competition... a population takes account... the proportions... the different age groups.

9.... the UK the normal age... retirement is 65 years.

10. The gradual reduction... the working week has been accompanied... an extension... the annual holiday period.

10. Put questions to the sentences:

1. The same question raise additional considerations.

2. They will depend upon a number of things.

3. The age composition of a population takes account of the proportions in the different age groups.

4. The normal age of retirement in the UK is 65years.

5. This amounts to a reduction in the supply of labour.

6. Higher incomes make leisure more attractive.

7. High wage rates may reduce the amount of labour.

11. Fill gaps using correct form of the verbs in brackets:

1. Labour... to the production of goods and services (to direct).

2. It is also the reason why economic activity... (to take place).

3. The people who... in production are also consumers (to take part).

4. The sum of those individual demands... the business person to undertake production (to provide).

5. It is necessary... labour somewhat differently from the other factors (to treat).

6. There are social and political problems which have... into account (to take).

7. The question of how many hours per day a machine should be... will be judged solely in terms of efficien­cy (to operate).

8. Both of these factors are subject... (to change).

9. Two countries might... the same total population (to have).

10. The age range 16 to 65 years... the working age groups (to cover).

12. Answer the following questions:

1. What does the term 'labour' involve?

2. Why is it necessary to treat labour somewhat differ­ently from the other factors of production?

3. Why cannot a firm buy and own labour in the same way that capital and land can be bought and owned?

4. What is labour supply?

5. How is the supply of labour influenced by the size of the total population?

6. What is the average age for retirement in the UK?

7. How may the working population be defined?

8. What amounts to a reduction in the supply of labour?

9. Why doesn't a fall in the supply of labour imply a reduction in the output of goods and services?

10. What kind of relationship exists between the amount of work offered and the price paid for that work?

13. Retell text A

14. Read text B and explain the meaning of the terms:

'Capital', 'Working capital', 'Fixed capital', 'Wealth', 'Money'.

Text B