The Basics of Business English

Basic Concepts of Economics

«Economy is how to spend money without enjoying it»

Economics and the Problem of Scarcity

Economics is the social science that studies the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek «oikonomia» (management of a household, administration). Economics aims to explain how economies work and how economic agents interact.

Economic analysis is applied throughout society, in business, finance and government, but also in crime, education, family, health, law, politics, religion, social institutions, war and science. A person who studies economics is an economist. Economists are employed in banking, finance, accountancy, commerce, marketing, business administration and non-profit organizations.

The system of production, distribution and consumption of goods and services is known as an economic system. It is the set of principles and techniques by which problems of economics are addressed, such as the economic problem of scarcity.

Try to imagine a world in which all our needs and wants were instantly and perfectly fulfilled. Economics and economists would be unnecessary because no one would be forced to make any decisions.

The hard reality is that productive resources, and hence, production, are limited.

Combining these facts raises (generates) scarcity. Scarcity is the basic economic

problem faced by all societies. Scarcity means that available resources are insufficient to satisfy all wants and needs.

Scarcity confronts every society with four basic economic questions:

What economic goods will be produced?

How will resources be used in production?

Who will consume economic goods?

When will resources or goods be used?

A good (anything that adds to human happiness) is scarce if the amounts people desire are greater than the amounts available. People generally are individually or collectively (through taxes) willing to pay a high price for scarce goods — banana splits, public parks, or an apartments are obvious examples. Services such as haircuts, delivery or police protection are also goods because they add to our happiness.

Glossary.

production — Արտադրություն

distribution — Բաշխում

Consumption — Սպառում

consumer — Սպառող

accountaney — Հաշվապահություն

commerce — Առևտուր

non — or not — for profit — Ոչ առևտրային բիզնես

resources — Պաշարամիջոց

tax — Հարկ

entail — Հանգեցնել

valuable — Թանկարժեք

land — Հումք

labor — Աշխատուժ

entrepreneurship — Ձեռներեցություն

entrepreneur — Ձեռնարկատեր

enterprise — Ձեռնարկություն

land rent — Հողի վարձ

quest — Որոնում

bear the risks — Կրել ռիսկերը