Unit 1

MARKET ECONOMY

Objectives:

-students will become familiar with specific vocabulary of market economy

-reading comprehension; writing skill
-present tense, present perfect tense simple and continuous

I. Answer the questions before reading the text:

1. Name some characteristics of the market oriented economic system.
2. Define the transitional economy.

Reading comprehension
All societies are faced with the question of what to produce, how much to produce, who
produces it, who will receive the goods. The answer to all these questions is provided by the
economic system of the society. The government can direct the factories on what goods to
produce and how much of these goods, and management and private businesses can determine
what and how they should produce. In one type of system people buy goods and services with
income earned from production. In another the government gives purchasing power but not
earned by producing goods and services.
Land, labor, capital and entrepreneurship are required to produce goods and services. Land
includes the natural resources growing on or under the earth's surface. Labor includes that total
human resources to turn raw materials into goods and services. Capital is the total money, tools,
machinery and buildings used in the process of labor. The final factor is entrepreneurship that is
the skills and risk-taking to turn the other factors of production into goods and services.
In a capitalist economic system, people, or in economic terms, households, own privately all
these factors of production as opposed to being owned by the state in a command system. That is
why, a capitalist system, a market system is organized from the bottom up, as the consumer gives
the orders. They are transmitted to retailers, dealers, and so on. By an elaborate division of labor,
economic activity is carried on with no plan or no committee giving orders but by a system of
market competition ordered by the consumer's choice itself.
Consequently, private enterprise is characterized by decisions that are taken in the market place,
as opposed to the state planned and owned economic system. Prices function as a major signal or

indicator as to what should and what should not be produced, because market economy system is
governed by the laws of competition and is also regulated by supply and demand. The consumer
is the one that benefits from this competition because he is going to get better products and
services at lower prices. Competition in business is a sort of competition in sports or competition
in any thing in life, as it keeps you on your toes, you have to keep improving, and it helps you
sharpen. This is also the way of obtaining profit that encourages the private enterprise system to
look for those cost-cutting technologies, for lowering the prices and for improving quality. Profit
helps fuel the system, and generates progress. It grows people who are likely to come up with
new ideas, new technologies, that are going to cause us to leap forward in the process of
economic growth and development, bringing new goods and services on the market.
Secondly, the entrepreneurs create new jobs. Entrepreneurship is the place for individuals who
want to do their own thing, who do not like to see themselves fitting into the mold of some
bureaucratic structure, be it corporate or be it public, for people who want to go out there and
work their own hours, set their own times, work 70 hours one week if they want to, and take off
for a week if they feel like it. It allows you to do research and development that would not be
done if it weren't for a good profit. It allows a whole series of very tangible asset development
programs that can tend to make an organization much stronger for the future, for new employees.
In the command economy, the government makes all the decisions concerning production,
distribution, and consumption, as it owns all the major factors of production. All the natural laws
of competition, supply and demand do not operate any more. An elaborate system of command is
determined by the state property, so orders are given and orders have to be obeyed, as the only
owner of the factors of production makes conscious economic decisions, running the whole
society as an obedient army, to a central direction. The consumer is not the one to decide for
himself in the market, but only the state.
II. Answer the following questions after having read the text:
1. Who is to decide on the supply and demand relationship in a market economic system?
2. Define profit based on the next spider structure
w h a t it i s g o o
d

fo r ?

w h e n d o y o u g e t it ?

p ro fi t

o
h

is t o g e t it ?

Ho w

doy o
u

ge
t i t?

3. Who is taking decisions in a command economy?

Speaking
III. Compare market economy and command economy according to the following headings:
ownership
competition Supply/deman Price/quality Profit/productivit motivation
d
y

Writing
III. Write a 150 word essay on
1. the relationship between human resources education and economic development
2. relationship between culture, tradition, history and the economic system typology

Vocabulary
IV. Fill in the blanks the missing words: market society, consumerism, demand, job security,
retirement benefits, employees, annual income
he upshot of the foregoing is that a market economy can be prevented from engendering a
. by voiding it of fear. There is no mystery about the sorts of measures to
accomplish this. They include a guaranteed .., full employment through job
creation and training, adequate health and old age care programs, and the like. Removing fear
from the market would inhibit selfishness at least to the extent that people could afford to be
moral. It would enable people safely to see themselves as trustees of possessions and of their
own talents rather than as their private owners. Removal of fear would permit people to engage
in work and lives outside work that are meaningful to them, thus inhibiting greed an
.
In our capacities as .. we are certainly subject to market forces. If there were no
. for our services, we would not likely be employed, and if there were hyper demand
with scarce supply, we would be making more money. Yet most of us enjoy .. .. in
the form of tenure, we earn high enough incomes to lead dependably comfortable if not luxurious
lives, and possess some form of . .. and protection against high health care
costs. The result is that we are able to put our talents to personally meaningful and socially
beneficial use.
V Find synonyms to Market:
Advertise, display, barter, retail, wholesale, exchange, merchandise, goods, market place, mart,
gallery, patron, bazaar, cartel, concern, corporation, establishment, fly-by-night operation,
monopoly, outfit, partnership, shoestring operation (a business, organization etc that does not
have much money available to spend), shop, store, syndicate, trust, venture, affairs, buying and
selling, contract, deals, free enterprise, merchandising, traffic, transaction, undertaking, mall,
meeting place, plaza, shopping center, trading center, hub,

Grammar bite
VI. Put the verbs in brackets in the correct form of the present tense simple or continuous;
make the necessary changes when needed.

1. He just _______ a telephone call right now to his management accountant for an advice.
(make)
2. We always _________ to the meeting when our team negotiates (go).
3. Our president _________ a speech today at the conference (deliver).
4. They __________ software package from firms specializing in them saving a considerable
amount of time and money instead of developing their own. (buy)
5. I always _________ share holders to pay off their shares. (advise)
6. The members of the board ____________ all our meetings (attend)
7. I __________ all my business correspondence this morning (write).
8. The management of the planned shopping center _________ the groups of businesses,
primarily retailers sharing the building. (control).
9. The government ___________ the activities of the firms and _____________ productive
resources in command economy (direct/allocate)
10. The command system philosophers __________ that the system prevents the exploitation of
workers by capitalists. (argue)
VII. Put the verbs in brackets in the right form of the present perfect tense simple or
continuous:
1. Western economists _____________ that planned economy is likely to lead to inefficiency.
(point out)
2. The bureaucrats running the command systems _____________ never sufficient information
to allocate resources in a way to satisfy consumer demands. (have)
3. Occupying the square mile on the north of the River Thames between Waterloo Bridge and
Tower Bridge, the City of London _____________ an international merchant center since
medieval times. (be)
4. The head offices of the most important banks, money markets, foreign exchange markets,
commodity exchanges, insurance market, London Stock Exchange and offices of foreign
financial institutions ______________ always the financial district of London. (represent)
6. They _____________ all the raw materials they needed this week in the Commodity
Exchange. (trade)
7. This week the wholesaler ___________ to retailers at discount prices on condition that they
pay in cash, collect the goods by themselves and buy in bulk. (sell)
9. Today the board ______________ their company capital structure, i.e. shares, loan stock.
(analyze)
10. The accountant ____________ the capital equivalent to the assets that yield a regular income.
(calculate)
VIII. Put the verbs in brackets in the right form of the Past Tense or Past tense Continuous:
1. Adam Smith (1723-1780) __________ the concept of working capital. (introduce)
2. He ____________ the origins of wealth creation _____________ the benefits of free
trade. (explain/advocate)
3. He ___________ the economic relationship between the classes: workers, who
______________ their living by wage labor; capitalists who ____________ income from
profits. (analyze / earn / derive)
4. The supply and demand relationship _________ prices. (determine).
5. He always ____________ his agent the commission in time. (pay).

6. Last century the same companies ____________ soft commodities, such as grain, coffee,
cocoa, wool, cotton, jute, rubber on commodity markets. (trade)
7. When we began the meeting the accountants still _________ the loss. (calculate)
8. When I called, the new board members ___________ to setting out the new priorities.
(work)

Supplementary reading
IX. What is your opinion on the rising Sharing economy?

Translation
X. Translate into English:
A)
"... adevrata libertate de expresie a ceteanului se realizeaz numai prin respectarea
dreptului la proprietate care asigur, n timp, independena economic a individului fa de stat."
(Ovidiu Lazar,"Antreprenorul", Fort Ross Inc., New York, USA, 1994)
"Poate c trebuie s nelegi libertatea pentru a te bucura de adevaratul ei pre ."
(H.Balzac)
"Fr libertate, nu exista comer." (Adam Smith)
"Cel ce dorete s devin ntreprinzator este incitat de o nevoie intern s nu depind de
alii, fie c ei se numesc prini, proprietari sau efi".
(Anastasios D. Karayannis, Succesul n afaceri, Bucureti, 1995)
B)
Tbliele de lut (clay tables) gsite stau mrturie c mai nainte nc de legiferarea lsat de
Hammurabi, templele din Babilon aveau o activitate ce poate fi asemnat, n unele privin e, cu
aceea a instituiilor bancare moderne. Aezmintele (settlements) nchinate (dedicate) zeilor
acumulaser mari bogii imobiliare (real estate) i mobiliare (securities), aveau pmnturi,
cirezi, ateliere, unelte, sclavi, depozite de cereale, stocuri de lingouri din metale preioase. Aceste
avuii nu conteneau s fie sporite att prin munca sclavilor ct i prin mprumuturi purttoare de
dobnzi mari, (high interest loans) condiiile tranzaciilor fiind precis stabilite prin nscrisuri
(writings). S-au gsit dovezi convingtoare c operaiunile de credit erau frecvente i c templele
din Babilon ineau evidene contabile (keep books) amnuntite. De remarcat, c n nscrisurile pe
lut se ntlnesc multe din enunurile ce prefigureaz ( anticipate) cadrul juridic modern, precum
ipoteca (mortgage) asupra bunurilor debitorului, girul (endorsment) asupra unor persoane
considerate solvabile, (solvent) urmrirea (legal pursuit) n caz de neplat. Templele acceptau s
efectueze decontri, (settlements) chiar n locuri ndeprtate pentru clienii care le ncredinaser
depozite.