Nama : Ilham Purnama Pandju

Nim : 102-20-0015
UTS : Bahasa Inggris
Prodi : Manajemen

ECONOMICS

“Economics is not about things and tangible

material objects; it is about men, their meanings
and actions”
Ludwig Von Mises

 Distinguish the main economic systems

 Understand the definition of business, its risks and rewards 3.
Evaluate the chances of starting and operating a business
in the Republic of Moldova

Study and Learn the Words:

English English equivalents Romanian Russian
acţiuni, titluri de
shares акции
valoare
частное
free enterprise iniţiativă liberă
предпринимательство
a large park where people
go to enjoy themselves
and where much of the
theme park entertainment is
connected with one
subject: e.g. A
westernstyle theme park
executive manager of a company
shareholder acţionar акционер
the people who run and
management
control an organization
competition concurenţă конкуренция
a thing that happens as a
by-product produs secundar побочный продукт
result of sth else
raw materials materie primă сырьё
to furnish a aproviziona предоставлять
to process a prelucra перерабатывать
tangible goods bunuri materiale материальные товары
юридическая
legal advice consultaţie juridică
консультация
automatic cutie de viteză автоматическая
transmission automată коробка передач
seats whose position can
power seats
be changed automatically
дистанционное
remote-control telecomandă
управление
side mirror oglinda laterală боковое зеркало
cutie de viteză ручная коробка
stick shift
manuală передач
not to go well (about
to go rough
business)
sales revenue venit din vânzări доход от продаж

Read the following text and do the exercises given after it

There are four types of economic systems:

 Traditional economy is one in which economic behaviour is based primarily on
tradition, custom and habit. It is characteristic of primitive societies.
 Command/planned economy is one in which some central authority or state
determines economic behaviour. Such type of economic system was in the former
USSR.
 Market economy is one in which markets play a dominant role in taking economic
decisions process. It is characteristic of the Western European countries.
 Mixed economy is one in which both free markets and governments have significant
effects on the allocation of resources and the distribution of income. This type of
economic system is characteristic of the USA, Japan and other highly industrialized
countries.
Perhaps the most important characteristic of American business is the freedom of
individuals to start a business, to work for a business, to buy or sell ownership shares in a
business, and to sell a business outright. Within certain limits imposed mainly to ensure public
safety, the owners of a business can produce any legal product or service they choose and sell it
at any price they set. This system of business, in which individuals decide what to produce, how
to produce it, and at what price to sell it, is called free enterprise.
 The American system of free enterprise ensures, for example, the right of Walt Disney to
start an entertainment company, to hire an assortment of artists, and to experiment in developing
theme parks. Their system gives the current executives at Disney and its shareholders the right
to make a profit from the company's success, it gives Disney's management the right to compete
with 20th Century Fox, and it gives movie-goers the right to choose between films produced by
the two companies and many others. Competition like that between Disney and 20th Century
Fox is a necessary and extremely important by-product of free enterprise. Because many
individuals and groups can open businesses, there are sure to be a number of firms offering
similar products. But a potential customer may want only one such product—say, a Jeep
Cherokee or a Chevrolet S-10 Blazer—and not be interested in purchasing both. Each of the
firms offering similar products must therefore try to convince the potential customer to buy its
product rather than a similar item made by someone else. In other words, these firms must
compete with each other for sales. Business competition, then, is essentially a rivalry among
businesses for sales to potential customers. In free enterprise, competition works to ensure the
efficient and effective operation of the business. Competition also ensures that a firm will
survive only if it serves its customers well.

1.1. Business
Business is the organized effort of individuals to produce and sell, for a profit, the goods
and services that satisfy society's needs. No person or group of persons actually organized
American business as we know it today. Rather, over the years individuals have organized their
own particular businesses for their own particular reasons. All these individual businesses, and
all the interactions between these businesses and their customers, have given rise to what we call
American business.
A person who risks his or her time, effort, and money to start and operate a business is
called an entrepreneur. To organize a business, an entrepreneur must combine four kinds of
resources: material, human, financial, and informational. Material resources include the raw
materials used in manufacturing processes, as well as buildings and machinery. Human
resources are the people who furnish their labour to the business in return for wages. The
financial resource is the money required to pay employees, purchase materials, and generally
keep the business operating. And information is the resource that tells the managers of the
business how effectively the other resources are being combined and utilized.
Businesses are generally of three types. Manufacturing businesses (or manufacturers) are
organized to process various materials into tangible goods, such as delivery trucks or towels.
Service businessesproduce services, such as haircuts or legal advice. And some firms—called
middlemen—are organized to buy the goods produced by manufacturers and then resell them.
For example, the General Electric Company is a manufacturer that produces clock radios. These
products may be sold to a retailing middleman, which then resells them to consumers in its retail
stores. Consumers are individuals who purchase goods or services for their own personal use
rather than to resell them.
All three types of businesses may sell either to other firms or to consumers. In both cases,
the ultimate objective of every firm must be to satisfy the needs of its customers. People
generally don't buy goods and services simply to own them; they buy products to satisfy
particular needs. People rarely buy an automobile solely to store it in a garage; they do,
however, buy automobiles to satisfy their need for transportation. Some of us may feel that this
need is best satisfied by an air-conditioned BMW with stereo cassette player, automatic
transmission, power seats and windows, and remote-control side mirrors. Others may believe
that a Ford Taurus with a stick shift and an AM radio will do just fine. Both products are
available to those who want them, along with a wide variety of other products that satisfy the
need for transportation.
When firms lose sight of their customers' needs, they are likely to find the going rough. But
when the businesses that produce and sell goods and services understand their customers' needs
and work to satisfy those needs, they are usually successful.
In the course of normal operations, a business receives money (sales revenue) from its
customers in exchange for goods or services. It must also pay out money to cover the various
expenses involved in doing business. If the firm's sales revenue is greater than its expenses, it
has earned a profit. So profit is what remains after all business expenses have been deducted
from sales revenue. A negative profit, which results when a firm's expenses are greater than its
sales revenue, is called a loss.
The profit earned by a business becomes the property of its owners. So in one sense profit
is the return, or reward, that business owners receive for producing goods and services that
consumers want.
Profit is also the payment that business owners receive for assuming the considerable risks
of ownership. One of these is the risk of not being paid. Everyone else—employees, suppliers,
and lenders—must be paid before the owners. And if there is nothing left over (if there is no
profit), there can be no payments to owners. A second risk that owners run is the risk of losing
whatever they have put into the business. A business that cannot earn a profit is very likely to
fail, in which case the owners lose whatever money, effort, and time they have invested. For
business owners, the challenge of business is to earn a profit in spite of these risks.

Verb collocations:
To run a business = to be in charge of a business (e.g. to run a hotel, to run a store)
To run a newspaper = to be the chief editor of a newspaper
To run a test = to do a test
To run a risk = to risk
To run a temperature = to have a temperature that is higher than normal.

Use the above phrases of words in your own sentences.

WORD STUDY
The word BUSINESS has several meanings. Depending on the meaning this word can be
countable or uncountable.

It is uncountable when it refers to:

 the activity of making, buying, selling or supplying goods or services for money.
Syn.: trade, commerce.
E.g. big business, small business, to do business, to go into business
-the work that is part of your job. E.g. to be away on business.
 something that concerns a particular person or organization, their responsibility.
E.g. It is my business to organize the exhibition. -a matter, an event, a situation
E.g. the business of the day.

It is countable when it refers to:

 a commercial organization such as a company, shop or factory. E.g. to have
several businesses.

I. VOCABULARY PRACTICE
 Find the words in the text that are synonyms of:
 to buy =to shop 6. intermediary=for liaison
 to persuade= to seduce 7. fundamental goal= fundamental purpose
 to employ= to use 8. businessman= businessman
 to go bankrupt= to go out of business 9. to provide sb with sth=to hold
 to produce=to manufaktur10. merchandise=produk

 Find in the text English equivalents for the following:

 Economie de piaţă/ рыночная экономика
 Economie mixtă/ смешаная экономика
 Economie planificată/ плановая экономика
 A vinde la un preţ/ продавать по цене
 Furnizor/ поставщик
 Creditor/ кредитор
 A nu avea success, a merge prost (despre afaceri)/ не иметь успеха, идти плохо (о
делах)
 A satisface necesităţile clienţilor săi/ удовлетворять нужды своих клиентов
 A-şi asuma un risc/ взять на себя риск
 A fi disponibil pentru cineva/ быть в наличии для кого-либо 11.A fi interesat în
cumpărare/ быть заинтересованным в покупке
12.Venit din vânzări/ доход от продаж.

 COMPREHENSION
Give answers to the following questions:
1. What economic system is characteristic of the Republic of Moldova?
Answer:Capitalist economic system

2. What is the most important characteristic of American business?

Answer:Individualist level
3. What is the important by-product of free enterprise?
Answer:What is important is the by-product of free business,namely any goods or
services that are offered for sale by producers

4. What is business and who organized the modern American business?

Answer:Business is an individual organized effort to produce and sell for a profit
,goods and services that meet the needs for society(George Peobody)

5. What resources must be combined in order to start a business? What do you think,
what kind of resources is of greatest importance nowadays? Give your reasons.
Answer:Resources that must be combined to start a business
a. Commitment
b. Have passion,determinition and discipline
c. Knowledge
d. Have sufficient initial capital
e. Business support
In our opinion,human resources are one of the most important
elements for a business or company tu run well.

6. What types of businesses do you know? To your mind, what type is widespread in our
Republic and why?
Answer:Tyepes of business
a. Agricultural Business
b. Raw material production business
c. Manufacturing business
d. Constructin business
e. Transfortasion business
f. Communication business
g. Large/ small trading business
h. Financial business
In our opinion, it is a manufacturing business, which is a type
of company that processes various materials into
materialized goods, for example, such as delivery trucks or
towels

7. What is the ultimate objective of every firm? Do you agree with it?
Answer : The ultimate goal of each company is to make a profit (profit). Yes, we
agree
8. What is profit and what is a loss? In your opinion, if the firm’s expenses are equal to
its sales revenue, can such firm still function or not?
Answer :* Advantage
a. Freedom
b. Opportunities to make more money
c. Learning opportinities
 d. Have creative freedom
e. Tax benefits
*loss
a. Financial
b. Stress increases
c. Less free time
d. Must be willing to do things that are not
e. Lots of unexpected things
In our opinion, the company is not functioning properly.
9. What risks are assumed by businessmen?
Answer :*Risk
a. Intense compatition
b. Work hard to build a business
c. Loss
d. Unstable marekt conditions
e. bankruptcy
10.Do you agree or disagree with the statement:“Life, in general, is a risky business”?
Answer : Agree

What is the usual antonym to these words?

1) to sell = to buy 7) to fire = to recruit
2) producer = consumers 8) intangible goods = tangible goods
3) to wholesale = for units 9) to prosper =slumped
4) profit = loss 10) to gain = lost
5)borrower =returt 11) to add(e.g. 2+5) =reduce
6)employer = accept work 12) failure =success

DISCUSSION
1. Is it easy or difficult to start and operate a business in our Republic?
Answer:Establishing a business is easy,the difficult is developing it.
2. What does one need in order to start his/her own business and to be a successful
entrepreneur?
Choose out of these 3 most important things and give your reasons:
 business knowledge
 courage
 leadership
 financial support
 tremendous drive (= a very strong desire to do sth)
 impertinence
 true entrepreneurial spirit
 brilliant ideas
 communication skills
  patience
Answer:What someone needs to start a business
a. Evaluate yourself
b. Think of a business
c. Conduct a survey
d. Get feedback
e. Capital
f. Business development
3.If you had a chance to start a business, in what sphere would you like to work?
Answer:Tour

1.2. The Economics of Business

Learning objectives:
 Grasp the economics and economy concepts
 Analyze Adam Smith’s view about self-interest pursued by private individuals
 Recognize the four main features of laissez-faire capitalism
 Comprehend how the 3 basic economic questions are answered in the
freemarket economy
 Read the following text and do the exercises given after it

Economics is the study of how wealth is created and distributed. By wealth we mean
anything of value, including the products produced and sold by business. "How wealth is
distributed" simply means "who gets what."
According to economic theory, every society must decide on the answers to three
questions:
 What goods and services—and how much of each—will be produced?
 How will these goods and services be produced? (That is, who will produce them and
which resources will be used to do so?)
 For whom will these goods and services be produced? (This is the question "Who
gets what?")
The way in which a society answers these questions determines the kind of economic
system, or economy, that society has chosen. In the United States, their particular answers have
provided them with a mixed economy, which is based on laissez-faire capitalism, or private
enterprise. Their free enterprise business system is the practical application of this economic
system.

Laissez-Faire Capitalism
Laissez-faire capitalism stems from the theories of Adam Smith, a Scot. In 1776, in his
book The Wealth of Nations, Smith argued that a society's interests are best served when the
individuals within that society are allowed to pursue their own self-interest. Smith believed that
each person should be allowed to work toward his or her own economic gain, without
interference from government. In doing so, each person would unintentionally be working for
the good of society as a whole. And society would benefit most when there was the least
interference with this pursuit of economic self-interest. Government should therefore leave the
economy to its citizens. The French term laissez faire implies that there shall be no interference
in the economy; loosely translated, it means "let them do" (as they see fit).

The features of laissez-faire capitalism are:

Private Ownership of Property Smith argued that the creation of wealth (including
products) is properly the concern of private individuals, not of government. Hence the resources
that are used to create wealth must be owned by private individuals. Economists recognize three
categories of resources: land, labor, and capital, also known as the factors of production. Land
includes the land and the natural resources on and in the land. Labour is the work performed by
people. Capitalincludes financial resources, buildings, machinery, tools, and equipment that are
used in an organization's operations. We have referred to these resources as material, human,
and financial resources, and we shall continue to do so. Today, business people use the term
capital to mean both capital goods and the money needed to purchase them.
Smith argued further that the owners of the factors of production should be free to
determine how these resources are used. They should also be free to enjoy the income and other
benefits that they might derive from the ownership of these resources.
Economic Freedom Smith's economic freedom extends to all those involved in the
economy. For the owners of land and capital, this freedom includes the right to rent, sell, or
invest their resources and the right to use their resources to produce any product and offer it for
sale at the price they choose. For workers, this economic freedom means the right to accept or
reject any job they are offered. For all individuals, economic freedom includes the right to
purchase any good or service that is offered for sale by producers. These rights, however, do not
include a guarantee of economic success. Nor do they include the right to harm others during the
pursuit of one's own self-interest.
Competitive Markets A crucial part of Smith's theory isthe competitive market composed
of large numbers of buyers and sellers. Economic freedom ensures the existence of competitive
markets, because sellers and buyers can enter markets as they choose. Sellers enter a market to
earn profit, rent, or wages; buyers enter a market to purchase resources and products. Then, in a
free market, sellers compete for sales and buyers compete for available goods, services, and
resources.
This freedom to enter or leave a market at will has given rise to the name free-market
economy for the capitalism that Smith described.
 Limited Role of Government InSmith's view, the role, of government should be limited to
providing defense against foreign enemies, ensuring internal order, and furnishing public works
and education. With regard to the economy, government should act only as rule maker and
umpire. As rule maker, government should provide laws that ensure economic freedom and
promote competition.As umpire,it should act to settle disputes arising from conflicting
interpretations of its laws. Government, according to Adam Smith, should have no major
economic responsibilities beyond these.

What, How and for Whom in the Free-Market Economy

Smith's laissez-faire capitalism sounds as though it should lead to chaos, not to answers to
the three basic economic questions. How can millions of individuals and firms, all intent only on
their own self-interest, produce an orderly economic system? One response might be simply,
“They canand they do." Most of the industrialized nations of the world exhibit some form of
modified capitalist economy, and these economies do work. A better response, however, is that
these millions of individuals and firms actually provide very concrete and detailed answers to
the three basic questions.
What to Produce? This question is answered continually by consumers as they spend their
dollars in the various markets for goods and services. When consumers buy specific products,
they are casting "dollar votes" for these products. These actions tell resource owners to produce
more of this product and more of the capital goods with which the product is manufactured.
Conversely, when consumers refuse to buy a product at its going price, they are voting against
the product, telling producers to either reduce the price or ease off on production. In each case,
consumers are giving a very specific answer concerning a very specific product.
How to Produce? The two parts of this question are answered by producers as they enter
various markets and compete for sales and profits. Those who produce for a particular market
answer the question "Who will produce?" simply by being in that market. Their answer, of
course, is "We will.”
Competition within various markets determines which resources will be used. To
compete as effectively as possible in the product markets, producers try to use the most efficient
(least-cost) combination of resources. When a particular resource can be used to produce two or
more different products, then producers must also compete with each other in the market for that
resource. And, if the price of one needed resource becomes too high, producers will look for
substitute resources—say, plastics in place of metals. The resources that will be used to produce
are those that best perform their function at the least cost.
For Whom to Produce? In a market economy, goods are distributed to those who have the
money to purchase them. This money is earned by individuals as wages, rents, profit, and
interest—that is, as payment for the use of economic resources. Money is therefore a medium of
exchange, an artificial device that aids in the exchange of resources for goods and services. The
distribution of goods and services ("who gets what") therefore depends on the current prices of
economic resources and of the various goods and services. And prices, in their turn, are
determined by the balance of supply and demand.
VOCABULARY PRACTICE
Find antonyms (1-7), synonyms (8-14) in the text to the following words and phrases:
 public (adj) =Personal 8. answer = The response
 to prohibit = Welcome9. profit = Profit
 rarely = Often 10. at wish = Hope
 to accept a job = Refuse a job11. to secure =Save
 to do good = Negating the bad12. to resolve conflicts =Solving problem
 to spend money =Save 13. replacement = Exchange
 exactly translated =Misrepresented14. to help = Help

COMPREHENSION
Give words to the following definitions:
1. The system through which a society answers the 3 economic
questions_What,How,Who_______
2.The study of how wealth is created and distributed Distribution or distibution is a
classification of payments in the form of rent,wages,interest,on capital and profit,related
to tasks which is carried out by land,labor,capital and entrepreneurs.It is the process of
determining the price from the perspective of the receipent income and income from the
point of view of the payer of expenses Distribution too means synonym for marketing
(marketing).Sometimes he is named as a functional distribution__ __
3.An economic system characterized by private ownership of property, free entry into
markets, and absence of government interference _____ Capitalist economic system _
4. Capital goods and the money needed to purchase them __Real cpital goods_____ 5.
The right to buy any good or service that is offered for sale by producers __The are
several consumer rights, namely : a). the right to safety ,security and comfort, b).right to
basic definition information, c).the right to hear complaints and opimions, d). the right
to get advocacy, e).the right to get consumer education, f).right to be served right, g).
right to compensation.
6.A place in which buyers and sellers of a good or service meet __Market or market_
7. Land, labour and capital _these three things are the factors of production______
8. An economic system in which individuals and firms are free to enter and leave
markets at will __perfect competition market_____ 9.A
person who settles disputes arising from conflicting interpretations of some official acts
______industrial relations____________________
10.An artificial device that aids in the exchange of resources for goods and
services __a).the existence of the company,b) consumers. c). online marketing,such as
tokopedia applications and others______________________

 Answer the following questions:

1. What economic system is there in the USA?
Answer : Capitalist economic system
2. Speak about the history of Laissez-faire capitalism. What are its features?
Answer :capita includes financial resources,buildings, machines,tools and
equipment used in organizational operations

3. What does the right of private property entitle the owner to do?
Answer : Entitled to land, labor and capital. For land and capital ownners,
this freedom includes to rent, sell, or invest their resources to produce any
product and offer it at a price they choose.

4. What is land, labour and capital?

Answer :* Soi is a layer of the earth
* A workforce is a person who works at someone else’s place

* Capital is a material that must be prepared before opening a

business.

5. What is economic freedom? What does it mean for the owners of land and
capital, for workers and for all individuals?
Answer :- Economic freedom is a framework in which principles compatible
with the ideals of prosperity are implemented in economic
institutins and processes.
- Meaning for owners of land and capital
- Meaning for land and capital workers
- Meaning for all individuals

6. What are competitive markets?

Answer : A competitive marker/ prefect competition market is a market
structure where there are many sellers or companies that produce goods or
provide services with buyers in the market with relatively the same or
homogeneous products sold.

7. What is the role of government in this economic system?

Answer :The role of government in the economic system is as stabilization,
allocation and distribution

8. What are the 3 economic questions that every society must answer in order to set
up an economic system?
Answer :: - what yields ?
- How to produce ?
- Who is it for ?

9. What economy do most of the industrialized nations of the world exhibit?

 Answer :Most of the industrialized countries of the world exhibit some
modified from of capitalist economy, and these economies are successful.

10. Who answers the questions “What to produce?’ ‘How to produce?’, and “For
whom to produce?”?
Answer :these questions are answered by manufacturers as they enter
various markets and compete for sales and profits.

III. WORD STUDY

There is a set of words related to the word economics. In a table we can show them like this:
y
ics
econom ic al ly
ist
Each word has a different use. Try to put the right word in the blanks in these sentences:

1) Smith and Keynes are two famous ist

2) Students at the Academy of al Studies are studyingiy.
3) We sometimes call a person’s work his alactivity.
4) People should be very ist with the money they earn.
5) Theysystem of a country is usually called the nationaly.
6) Don’t be ist with the truth. I want to know all the facts of this event.
7) Old people in our country live very iy.

FOR YOUR INFORMATION

Adam Smith was born in Kirkcaldy, Scotland, in 1723. In school he proved himself a good
scholar as he studied the usual subjects of the period – English, Latin, Greek, history, and
arithmetic. At 14, along with other boys of the same age, he entered Glasgow University, and in
1740 went on to Oxford.
Throughout his student years he encountered many ideas and individuals that would prepare
him for the eventual writing of his important work: An Inquiry into the Nature and Causes of
the Wealth of Nations. In it he brought together the economic concepts and theories that
established the basis of modern economics.
Smith’s main argument was that the general welfare of society is best promoted by allowing
individuals to pursue their own self-interest within the law, because this alone is “capable of
carrying on the society to wealth and prosperity.” People should be able to do so through
voluntary and mutually beneficial exchanges in free markets, with limited regulation by
government officials: “Every individual … intends only his own gain, and he is in this, as in
many other cases, led by an invisible hand to promote an end which was no part of his
intention.”
Smith also believed that any attempt by government to force the economy beyond this
“system of natural liberty” is counterproductive.
 Because of the original ideas Smith put forth in his works, he is considered the founder of
classical economics.

Checking for Understanding

1. What did Smith mean when he referred to an “invisible hand” that guides people’s economic
choices?
Answer :The economist Adam Smith in his book “Wealth of Nations” argues that an
“invisible hand” of the market will guide people to act in their own vested
interests,because the only way to make money is through voluntary exchange

2. List three examples in which a person’s pursuit of his or her own self-interest might benefit
society as a whole.
Answer :-Selfish,only selfish
-Don’t respect other people’s opinions
-Accusing other people of not even though myself did it

IV. DEBATE
“Every man, as long as he does not violate
the laws of justice, is left perfectly free to pursue
his own self-interest”
Adam Smith

Which of the 2 points of view concerning Adam Smith’s famous statements about
selfinterest do you adhere to? Form two teams. Each team should set forth as many arguments as
possible to defend their statements.

Team A Team B
Adam Smith’s statements Smith did not feel self-interest regarding
self-interest are and selfishness were the same, actually statements
about greed. and people are wrong to believe The capitalist economic
system that they are. Smith meant that it is effective only because of
the is only natural that every person greedy behaviour of individuals
tries to better his own condition. who are concerned with their Also,
one person’s gain is not own “self-interest”. necessarily obtained at
the other person’s expense.

V. FOCUS ON GRAMMAR
Fill in prepositions where necessary
1) According __is__ economic theory, every society must decide __ to__ the answers
__on__ 3 questions.
2) The American particular answers have provided them __something___ a mixed economy
based __on__ private enterprise.
3) Government should leave the economy __That__ its citizens.
4) Entrepreneurs can produce any product and offer it __to__ sale _with___ the price they
choose.
5) Buyers and sellers can enter _in_ a market and leave it __corresponding__ will.
6) When consumers refuse to buy a product _because___ its going price, they are voting
__high__ the product.
7) The distribution of goods and services depends __will__ the current prices of economic
resources.
8) If a product is sold _With__ high price, the demand __will__ this product decreases.

1.2.1. Planned Economies

Learning objectives:
 Comprehend how the 3 basic economic questions are answered in planned
economies
 Differentiate between market economy and planned economies
 Understand what every operating economy represents in reality

Study and Learn the Words:

English English equivalents Romanian Russian
at least cel puţin по крайней мере
to some degree în oarecare măsură в той или иной
степени
utilities servicii publice коммунальные
услуги
real property real estate proprietate imobiliară недвижимость
projected needs planned needs
professed aims aims that have been
publicly made known
waste devastare разорение
to advocate to propagate, to sustain
to set prices to establish prices
to fare a o duce поживать
to outweigh a depăşi перевешивать
 Read the following text and do the exercises given after it

The two other economic systems that contrast sharply with the capitalism of Adam Smith
are socialism and communism. These systems are sometimes called planned economies
because the answers to the three basic economic questions are determined, at least to some
degree, through centralized government planning.
SocialismIn a socialist economy, the key industries are owned and controlled by the
government. Such industries usually include transportation, public utilities, communications,
and those producing important materials such as steel. (In France, the major banks are
nationalized, or transferred to government control. Banking, too, is considered extremely
important to a nation's economy.) Land and raw materials may also be the property of the state
in a socialist economy. Depending on the country, private ownership of real property (such as
land and buildings) and smaller or less vital businesses is permitted to varying degrees. People
usually, may choose their own occupations, but many work in state-owned industries.
What to produce and how to produce it are determined in accordance with national goals,
which are based on projected needs, and the availability of resources—at least for government-
owned industries. The distribution of goods and services is also controlled by the state to the
extent that it controls rents and wages. Among the professed aims of socialist countries are the
equitable distribution of income, the elimination of poverty and the distribution of social
services such as medical care to all who need them, smooth economic growth, and elimination
of the waste that supposedly accompanies capitalist competition.
Britain, France, Sweden, and India are democratic countries whose mixed economies
include a very visible degree of socialism.
CommunismIf Adam Smith was the father of capitalism, Karl Marx was the father of
communism. In his writings (during the mid-nineteenth century), Marx advocated a classless
society whose citizens together owned all economic resources. He believed that such a society
would come about as the result of a class struggle between the owners of capital and the workers
they had exploited. All workers would then contribute to this communist society according to
their ability and would receive benefits according to their need.
Today North Korea is generally considered to have communist economy. Almost all
economic resources are owned by the government in this country. The basic economic questions
are answered through centralized state planning, which sets prices and wages as well. In this
planning, the needs of the state generally outweigh the needs of its citizens. Emphasis is placed
on the production of capital goods (such as heavy machinery) rather than on the products that
consumers might want, so there are frequent shortages of consumer goods. Workers have little
choice of jobs, but special skills or talents seem to be rewarded with special privileges. Various
groups of professionals (bureaucrats, university professors, and athletes, for example) fare much
better than, say, factory workers. Communist economies were in the former USSR, China, Cuba,
former Yugoslavia. Nowadays all these countries have market economies, some of them are in
the period of transition to the market one.
The so-called communist economies actually seem to be far from Marx's vision of
communism, but rather practice a strictly controlled kind of socialism. There is also a bit of free
enterprise here and there. For example, in the former Soviet Union, the farmers' markets (rinki in
Russian) not only were allowed but were also essential to the nation's food supply. However,
like all real economies, these economies are neither pure nor static. Every operating economy is
a constantly changing mixture of various idealized economic systems. Some evolve slowly;
others change more quickly, through either evolution or revolution. And, over many years, a
nation, such as Great Britain, may move first in one direction—say, toward capitalism—and
then in the opposite direction. It is impossible to say whether any real economy will ever closely
resemble Marx's communism.

I. VOCABULARY PRACTICE
A)Explain in English the meaning of the following phrases:
1. to contrast sharply = Shows a real difference when compared
2. the key industries =Public utility companies ( or simply utilities) are
organizations that maintain infrastructure as a public service
( often providing services using that infrastructure)
3. public utilities =This industry is a business activity, which is related to the
imrovement, production, processing or manufacture of
products
4. banks are nationalized =In the preamble to the DJB nationalization law, it is
stated that therepublic of indonesia as an independent
and sovereign state must have a national central bank.
The nationalization of DJB is an intial process for the
formation of a central bank
5. smooth economic growth=economic growth is a process in which income
increasses without linking it to population growth rates
6. to change through either evolution or revolution= Evolution is a process of
gradul (gradual) change where somothing changes into another from (which
usually) becomes more complex or changes into a better from . Revolution is a
social and culltural change that takes place quickly and concerns the basis or
pronciples of community life

B) Find in the text English equivalents for the following:

1. În dependenţă de ţară/в зависимости от страны
2. Avere imobiliară/недвижимость
3. Într-o măsură oarecare/в той или иной степени
4. Ramurile industriei care aparţin statului/отрасли промышленности, принадлежащие
государству
5. În concordanţă cu scopurile statului/в соответствии с целями государства
6. Printre scopurile proclamate/среди провозглашённых целей
7. Distribuirea echitabilă a venitului/справедливое распределение дохода
8. Lichidarea devastării, care ipotetic însoţeşte concurenţa capitalistă/ликвидация разорения,
которое предположительно сопровождает капиталистическую конкуренцию
9. Mijloace de producţie/средства производства
10. Deficitul frecvent al mărfurilor de larg consum/частый дефицит товаров широкого
потребления.

II. COMPREHENSION
A). Answer the following questions:
1. Why are socialism and communism sometimes called planned economies?
Answer : Because basically socialism and communism are economic philosophies that
advocate public rather than private matters.Such as the means of
production,discrubtion,and exchange of goods that make money in society

2. Who owns the key industries in a socialist economy?

Answer :China president Xi Jinping

3. Does private ownership of property exist in a socialist economy?

Answer :Ownership in the socialist economic system of property and wealth rests with
the state and property and wealth rests with the state and property ownership is
determined by the state

4. Where can people work in socialist countries?

Answer :In China

5. Who controls the distribution of goods and services in a socialist society?

Answer : According to socialist economic understanding,production is subject to
regulations center.All production sources are owned by the state.Basic distribution of
goods determined by the decision of the socialist state assembly.It was the state that
composed it the people’s production strategy,also determiners the outline of
distribution.Wage,salaries,interest,profits,and managers are regulated by the
government

6. What economies do Britain, France, Sweden and India have?

Answer :Capitalism

7. Who was the father of communism and what did he advocate? 8. What countries are
considered to have communist economies?
Answer :Mr Karl Marx

8. Who answers the 3 economic questions in a communist society?

Answer :-Great Republic of China
-Cuba
-Laos
-Vietnamese
-North Korea
-Transnistia
9. Do the so-called communist economies correspond to Marx’s vision of communism?
Answer :The people of a country

10. What does every operating economy represent in reality?

Answer :Marxism

B). Read the text more carefully and mark the statements with TRUE or FALSE
1. Planned economy is an ecomomy in which the answers to the 3 basic economic questions
are given by private individuals. (FALSE)
2. The key industries of any country are transportation, utilities, communications, and banking.
(TRUE)
3. What to produce and how to produce it in a socialist economy depends on the availability of
resources. (TRUE)
4. One of the professed aims of socialist countries is the distribution of social services to all
who have money to pay for them.(TRUE)
5. India is a social democratic country. ( TRUE)
6. In a communist society there is a slogan „Everybody will contribute according to their
ability and will receive according to their need”. (FALSE)
7. In a communist society prices and wages are set by the state. (TRUE)
8. Workers in a communist economy can choose any job they like. (TRUE)
9. Land and raw materials may belong to the state in a socialist economy. (TRUE)
10. There is no free enterprise in planned economies. (TRUE)
11. In a communist economy capital goods are produced in larger quantities than consumer
goods. (TRUE)
12. In the real world no economy attains „theoretical perfection”. (TRUE)

III. Match the words in column A with their definitions in column B

A B
1. subsidy a) The state of a company which is unable to pay its debts and has to be
wound up.
2. overstaffing b) Inability to find a job
3. unemployment c) A component of the market forces which when it prevails makes
prices of goods rise.
4. Supply d) A payment by a government to producers of certain goods to enable
them to survive in a difficult economic situation.
5. demand e) Rights over property
6. ownership f) Employment of personnel in excess of the real necessities
7. bankruptcy g) A component of the market forces which when it prevails makes
all
Ansewer : - 1 dan A
- 2 dan F
- 3 dan B
- 4 dan C
 - 5 dan G
- 6 dan E
- 7 dan D

IV. Fill in the gaps with the words from the list at the end of the text
A market economy is based on private that.(1) in contrast to planned economy where
when..(2) ownership prevails. In a free market economy efficiency is the key word, while on the
other hand planned economy most likely leads to .something.(3). In a free market economy
inefficient businesses go ..smooth(4), whereas in a planned economy businesses are something..
(5), thus allowing them to survive in spite of their non-satisfactory economic performance. This
enables the latter type of economy to resort to .idea.(6), that is employing more personnel than
actually required. Market economy leads to high something (7) of goods and services, while on
the other hand planned economy will not focus on offering high quality goods and services to a.
(8). This is due to the fact that in the latter type of economy there is actually no action.. (9), as
there are his10) monopolies and therefore the options of customers are severely restricted. On
the other hand in a market economy companies freelybecause.(11) for a larger to(12) share, and
are thus forced to be efficient and ..bagi.(13) staff according to real necessities and based on.
(14) their resources with utmost care.

Bankrupt; compete; competition; customers; inefficiency; manage; state; overstaffing;

ownership; quality; market; employ; government; subsidized.

V .On the basis of the above text complete the table giving the characteristic features of 2
types of economic systems, the first one has already been done for you

VI. Match the following 3 defintions with the words: Capitalism, Socialism, Communism.
1. An economic system in which everyone has an equal right to a share of a country’s wealth
and the government owns and controls the main industries. Communism
2. An economic system in which the state controls the means of producing everything on
behalf of people. Socialism
3. An economic system in which a country’s businesses and industry are controlled and run
for a profit by private owners rather than by government. Capitalism

VII. DISCUSSION
Give extensive answers to the following questions:
1. What are the professed aims of a socialist economy?
Answer :The goal of a socialist economy is to eliminate capitalism (turning an economy
based on investment and capital into social planning) to coordinate the production of
goods and services to eliminate the business cycle and excess production that occurs as
a result. Rom the accumulated capital and private ownership of the means of
production

2. Do you know the countries in which poverty does not exist?

 Answer :A country that has no poverty. Means ngrra “ terkaya. For example, America,
Singapore , Korea.

3. Is it ever possible to eliminate poverty in our country completely or it is something unreal?

Answer :poverty alleviation from indonesia is possible, because indonesia has abundat
natural resources.

VIII. DEBATE
Work in groups. Do you agree or disagree with the following statements? Give your
reasons:
1. The rich cannot exist without the poor.
Answer :Agree,because rich people cannot do all the work, so they need other people to
do the work that rich people cannot do

2. The state has an obligation to take care of homeless and poor people.
Answer :Agree, because the homeless and the poor are also citizens who must be
responded to

3. The only thing that can remove poverty is sharing.

Answer :Disagree, because to eliminate poverty not only with assistance, but by
improving human resources

4. Poverty is not just being without food. It is the absence of affection.

Answer :Disagree, because the basis of poverty is hunger and deprivation

1.3. Supply, Demand, Price and Competition

Learning objectives:
 Comprehend how supply and demand determine the price
 Characterize the four forms of competition
 Analyze the possible advantages and disadvantages of competition both for the
customers and for the sellers

Study and Learn the Words:

English English equivalents Romanian Russian
to affect to influence
bushel a unit for measuring grain, fruit
shift change
inflation a general rise in the prices of inflaţie инфляция
goods and services
generic product not using the name of the
company that made it
brand name the name given to a product by
 the company that produces it
Bayer the name of a famous
pharmaceutical company
warranty guarantee
recession recesiune, criză экономический
спад
to follow suit to follow an example
wariness precauţiune, осмотрительность,
prudenţă осторожность
scrutiny cercetare, verificare внимательный
meticuloasă осмотр;
наблюдение,
исследование
loan împrumut, credit заём, ссуда

WORD STUDY
to rise, to raise, to arise
The verb to rise (rose, risen) is used without object. It means to move from a lower to a
higher position:
E.g. She rose from the chair.
Gas rose in price.
Unemployment is rising.

The verb to raisemust have an object and it means to lift sth to a higher position or to
increase it:
E.g. She raised her eyes from her work.
Government has raised taxes. to raise
money = to collect money

The verb to arise (arose, arisen)means to happen, to occur, to start to exist. E.g. A
new crisis has arisen.

Now complete the following sentences with the 3 studied verbs. Use them in the
appropriate tenses.
1. Our supplier ____Raise_______ the price of electric equipment.
2. If any misunderstandings ____Raise_______ I’ll let you know.
3. The prices of raw materials ____Increased____________ recently.
4. The management of the company decided _______Raise________ the salaries.
5. It will be necessary ____Extra________ money if we want to extend the business.
6. We keep them informed of any changes as they _______Make_______ .
7. This book ______collects_______ many important questions.
8. Several new industries ______Operate_______ in the town.
9. Those who agree are asked ____Use_______ a hand.
10. Profits ____Increased_________ last year by 25%.
 Read the following text and do the exercises given after it

The supply of a particular product is the quantity of the product that producers are willing
to sell at each of various prices. Supply is thus a relationship between prices and the quantities
offered by producers, who are usually rational people, so we would expect them to offer more of
a product for sale at higher prices and to offer less of the product at lower prices.
The demand for a particular product is the quantity that buyers are willing to purchase at
each of various prices. Demand is thus a relationship between prices and the quantities
purchased by buyers, who are rational people too, so we would expect them to buy more of a
product when its price is low and to buy less of the product when its price is high. This is
exactly what happens when the price of fresh strawberries rises dramatically. People buy other
fruit or do without and reduce their purchases of strawberries. They begin to buy more
strawberries only when prices drop.

Forms of Competition
A free-market system implies competition among sellers of products and resources.
Economists recognize four different degrees of competition, ranging from ideal competition to
no competition at all. These are pure competition, monopolistic competition, oligopoly, and
monopoly.
Pure (or perfect) competition is the complete form of competition. It is the market
situation in which there are many buyers and sellers of a product, and no single buyer or seller is
powerful enough to affect the price of that product.The above definition includes several
important ideas:
 there is a demand for a single product;
 all sellers offer the same product for sale;
 all buyers and sellers know everything there is to know about the market; - the market
is not affected by the actions of any one buyer or seller.
In pure competition the sellers and buyers must accept the going price. But who or what
determines the price? Actually, everyone does. The price of each product is determined by the
actions of all buyers and all sellers together, through the forces of supply and demand. It is this
interaction of buyers and sellers, working for their best interest that Adam Smith referred to as
the “invisible hand” of competition.
Neither sellers nor buyers exist in a vacuum. What they do is interact within a market.And
there is always one certain price at which the quantity of a product that is demanded is exactly
equal to the quantity of that product that is produced. Suppose producers are willing to supply 2
million bushels of wheat at a price of $5 per bushel and that buyers are willing to purchase 2
million bushels at a price of $5 per bushel. In other words, supply and demand are in balance, or
in equilibrium, at the price of $5. This is the "going price" at which producers should sell their 2
million bushels of wheat. Economists call this price the equilibrium price or market price. Under
pure competition, the market price of any product is the price at which the quantity demanded
is exactly equal to the quantity supplied.
In theory and in the real world, market prices are affected by anything that affects supply
and demand. The demand for wheat, for example, might change if researchers suddenly
discovered that it had very beneficial effects on users' health. Then more wheat would be
demanded at every price. The supply of wheat might change if new technology permitted the
production of greater quantities of wheat from the same amount of acreage. In that case,
producers would be willing to supply more wheat at each price. Either of these changes would
result in a new market price. Other changes that can affect competitive prices are shifts in buyer
tastes, the development of new products that satisfy old needs, and fluctuations in income due to
inflation or recession. For example, generic or "no-name" products are now available in
supermarkets. Consumers can satisfy their needs for products ranging from food to drugs to
paper products at a lower cost, with quality comparable to brand name items. Bayer was recently
forced to lower the price of its very popular aspirin because of competition from generic
products.
Pure competition is only a theoretical concept. Some specific markets may come close, but
no real market totally exhibits perfect competition. Many real markets, however, are examples
of monopolistic competition. Monopolistic competitionis a market situation in which there are
many buyers along with relatively many sellers who differentiate their products from the
products of competitors and it is very easy to enter into this market. The various products
available in a monopolistically competitive market are very similar in nature, and they are all
intended to satisfy the same need. However, each seller attempts to make its product somewhat
different from the others by providing unique product features — an attention-getting brand
name, unique packaging, or services such as free delivery or a "lifetime" warranty.
Product differentiation is a fact of life for the producers of many consumer goods, from
soaps to clothing to personal computers. Actually, monopolistic competition is characterized by
fewer sellers than pure competition, but there are enough sellers to ensure a highly competitive
market. By differentiating its product from all similar products, the producer obtains some
limited control over the market price of its product.
An oligopolyis a market situation (or industry) in which there are few sellers (2-8).
Generally these sellers are quite large, and sizable investments are required to enter into their
market. For this reason, oligopolistic industries tend to remain oligopolistic. Examples of
oligopolies are the American automobile, industrial chemicals, and oil refining industries.
Because there are few sellers in an oligopoly, each seller has considerable control over
price. At the same time, the market actions of each seller can have a strong effect on
competitors' sales. If one firm reduces its price, the other firms in the industry usually do the
same to retain their market shares. If one firm raises its price, the others may wait and watch the
market for a while, to see whether their lower price tag gives them a competitive advantage, and
then eventually follow suit. All this wariness usually results in similar prices for similar
products. In the absence of much price competition, product differentiation becomes the major
competitive weapon.
A monopolyis a market (or industry) with only one seller. Because only one firm is the
supplier of a product, it has complete control over price. However, no firm can set its price at
some astronomical figure just because there is no competition; the firm would soon find that it
had no sales revenue, either. Instead, the firm in a monopoly position must consider the demand
for its product and set the price at the most profitable level.
The few monopolies in American business don't have even that much leeway in setting
prices because they are all carefully regulated by government.
 Most monopolies in America are public utilities, such as we find in electric
powerdistribution. They are permitted to exist because the public interest is best served by their
existence, but they operate under the scrutiny and control of various state and federal agencies.

I. VOCABULARY PRACTICE
A) Match the words with their definitions
1. to range from A to B a) the act of taking goods to the people who have ordered them
2. beneficial b) the amount of freedom you have in order to do sth in the way you
want to
3. recession c) to continue to have sth
4. packaging d) to vary from one thing to another
5. warranty e) a person or company that provides goods or services
6. to retain f) having a helpful or useful effect
7. supplier g) a written agreement in which a company selling sth promises to
repair or replace it if there is a problem with it within a particular period of
time
8. leeway h) a difficult time for the economy of a country when there is less
trade and more people are unemployed.
9. scrutiny i) materials used to wrap goods that are sold in shops 10 delivery
j) careful and thorough examination
Answer :
1) 1 -a
2) 2 - f
3) 3 - h
4) 4 - i
5) 5 - g
6) 6 - c
7) 7 -e
8) 8 – b
9) 9 –j
10) 10 - d

B) Find antonyms in the text to the following words:

1. supply = Receive
2. generic product=specific product
3. customer = seller
4. to be reluctant to do sth = want to do
5. deflation = inflation
6. to reduce the price=increasing the price
7. to ban = allow

II. COMPREHENSION
 A) Mark the statements with TRUE or FALSE and correct the false ones
1. Monopoly is a form of competition. (TRUE)
2. There is no product differentiation in pure competition. (TRUE)
3. All sellers offer the same product for sale in monopolistic competition. (TRUE)
4. American automobile industry is an example of pure competition. (TRUE)
5. Product differentiation is a fact of life for the consumers of many goods.(TRUE)
6. A monopolist can set any price he/she wants. (FALSE)
7. In oligopoly there can be 6 sellers. (TRUE)
8. There are more sellers in monopolistic competition than in pure competition. (TRUE)
9. Because of competition from generic products many famous companies are forced to lower
the prices of their brand-name products. (TRUE)
10. Oligopolists usually offer similar prices for similar products. (TRUE)

B) Choose the best variant (in some cases 2 variants are possible)
1.Competition offers consumers choices in
a)price c) style
b) quality d) all of the above
2.In order for competition to exist there must be
a). many products
b). 2 or more companies in the same business
c). 2 or more companies in different businesses
d). profits
3.An oligopoly exists when the control of the goods and services is in the hands of
a) 1 large company c) 2 big companies in the same business
b) several small companies d) 10 sizable companies
4.Many real markets are examples of
a). monopoly c) monopolistic competition
b). oligopoly d) pure competition
5.By differentiating his product the producer obtains
a).many consumers c) profit
b).control over price d) monopoly
6.Product differentiation is characteristic of
a). monopoly c) monopolistic competition
b).oligopoly d) pure competition
7.Barriers to enter the market are characteristic of
a).monopoly c) monopolistic competition
b).oligopoly d) pure competition

III. DISCUSSION
1. Comment on the statement: „Business competition encourages efficiency of production and
leads to improved product quality”.
 Answer :In the world of business competition is known as dynamics competition which
means the changes that occur against competition that occurs in the company in
competing for custumers at certain periods. For that every company needs pay
attention to the dynamics so they can follow competition so as not to experience defeat
in the competition in the market.

2. List the possible advantages and disadvantages of competition for both consumers and
producers.
Answer : - Advanteges :
a. Prices are actually formed through the pricing mechanism. The price
that is formed is not interfered with bye the government or producer
associations.
b. In the long runm there will be a price that benefits consumers
because the price is formed from the minimum average cost. So the
market guarantees the production of products at low costs.
- disadvantages :
a. The profits received are on a normal scale, so that some companies
find it difficult to provide funds for development.
b. Consumers, because the products on the market are homogeneous
products. Thus limiting consumer choices.

3. What kind of competition is there in the market of mobile communication in our country?
Answer :Quality download speed and operator service

4. Give examples of monopolies in our country. Why are monopolies prohibited in some
countries?
Answer : Companies whose production controls the lives of many people, for example
pertamina which controls the production and distribution of petroleum, or
PLN which is the main electricty provider in the mai electricity provider in
this country. Because it can cause market distortions,so that the market
becomes unbalanced and in turn prices are no longer controlled by market
laws, but are determined by a group of people who control market forces.

IV. CASE STUDY

Read the following text and answer the questions

Business Philosophy at the J.M. Smucker Company

„With a name like Smucker’s, it has to be good”. Based on Smucker’s recent success and
growth in the jam, jelly, preserves and marmalade industry, it would be hard for anyone to doubt
that statement. The total jam and jelly sales for Smucker’s is over $1billion a year. By first
chasing and then surpassing jelly giants Kraft, Inc. And Welch’s, Smucker’s now has a 37
percent share of the total jam and jelly market and is the leading manufacturer in the industry.
 The J.M.Smucker Company, based in Orrville, Ohio, is a family-run operation. In 1897
Jerome Monroe Smucker decided to bring in extra income by making apple cider and apple
butter from old family recipes. On the same property where today’s modern factory now stands,
Jerome carefully monitored the quality of his products, personally signing the paper tied over
each container of apple butter. Now, at all of Smucker’s ten plants around the country, a
devotion to quality remains a key element of Smucker’s business.
Soon after Jerome began his business, other members of the Smucker family became
involved. They took most of their earnings and poured them back into the company. In 1969 the
Smucker family decided to take their company public. They retained 30% of the stock, selling
25% to institutions and pension funds and the rest to individual investors.
Paul Smucker (the chief executive and grandson of the founder) and his sons are not taking
their number-one position in the jam and jelly market for granted. They know they must fend off
foreign jam companies, as well as variety of domestic competitors. Smucker’s must also respond
to the new waves of health awareness and calorie consciousness in the USA, as well as changes
in consumers’ tastes.
Part of the Smucker’s strategy for keeping on top is the introduction of new products.
Recently, Smucker’s has had a number of successful new entries into the market. „Simply
Fruit”, a fruit with no preservatives or artificial flavours and no extra sugar added, has been well
received. Smucker’s is also happy with the sales of its Fresh Pack Strawberry Preserves,
available for only a few weeks each year.
The Smuckers pride themselves on innovations of all kinds. Smucker’s, sensing the coming
of a trend, was the first company in the jam amd jelly industry to print nutritional information on
individual product label. It was the first company to use re-sealable lids on its jars. Smucker’
even has a special „invention group” that gets together to discuss ideas. All ideas, no matter how
outrageous, are encouraged. All negative comments in these meetings are prohibited.
Quality, integrity, and customer relations make up the foundation of Smucker’s company
philosophy. Quality comes first, earnings and sales growth come after. Paul Smucker personally
writes thank-you notes to all new shareholders. He also suggests that they tell a friend to try
Smucker’s products.
Smucker’s refuses to purchase advertising time during any television show that contains
violence or sex scenes. It wants to mantain its wholesome, old-fashioned image. Smucker’s also
pays for full-time federal government inspectors to monitor the entire jam and jelly
manufacturing process. Because of this, Smucker’s is the only company to carry the Agricultural
Department’s top U.S. Grade A designation on all its products.

COMMENTARY:
Preserve (n) = a type of jam made by boilig fruit with a large amount of sugar
To chase = to catch up with sb
To surpass = to become better than sb else
Apple cider = a drink made from the juice of apples that does not contain alcohol
Plant = factory
Earnings = the profit the company makes
To pour sth into sth = to provide a large amount of money for sth
 To take the company public = to start selling shares of the company on the stock
exchange
To fend off = to defend or protect yourself from competitors who are attacking you
Preservative (n) = a substance used to prevent food from decaying
Outragious (adj) = very unusual and slightly shocking
Integrity = the quality of being honest
Wholesome (adj) = good for your health
Grade A designation = having the status of offering the best quality

Questions:
1. What is the business that the J.M. Smucker Company is in? Can such business be profitable
in our country?
Answer : Producer of fruit jam, peanut butter, ice cream topping, sweetened
condensed milk, as well as health and natural foods and drinks

2. How many plants of this company function and where are they situated?
Answer :10 factories all over the country

3. How much percent of shares did this company sell to individual investors?
Answer :25%

4. Economists recognize 4 different degrees of competition. In which type of competitive

situation does Smucker’s participate?
Answer :they sell shares to 25% institutions

5. What is the Smucker’s strategy for mantainig the leading position in the industry?
Answer : carefully monitor the quality of production

6. What are the major components of Smucker’s business philosophy that have helped this
organization survive for so many years?
Answer :respond to health awareness and calorie awareeness

7. Why has Smucker’s been able to compete against jelly giants such as Kraft and Welch’s?
Answer :devotion to quality
2.ENTERPRISE

“No enterprise can exist for itself alone.

It ministers to some great need,
it performs some great service, not for itself, but for others; or
failing therein, it ceases to be profitable and ceases to exist”
Calvin Coolidge
 2. Recognize different types of enterprises

Study and Learn the Words:

English English equivalents Romanian Russian
enterprise întreprindere предприятие
a list of all the objects, furniture
inventory inventar инвентарь
in a particular organization; stock
исключительные
incorporeal rights rights to intangible property drepturi exclusive
права
to render services to offer services
registered capital capital social уставной капитал
the legal right to own sth, esp.
title to sth land or property; the document
that shows you have this right
to assign sth to sb to give sb sth that they can use
распоряжаться чемл
to dispose of sth a dispune de ceva
national a citizen of a particular country
întreprindere индивидуальное
sole proprietorship
individuală предприятие
parteneriat, партнёрство,
partnership
asociere товарищество
акционерное
corporation societate pe acţiuni
общество
impozabil, supus подлежащий
taxable (adj)
impozitării налогообложению
an amount that is extra or more
surplus
than you need
an organization of workers that
trade union exists to protect their interests, sindicat профсоюз
improve conditions of work
to be exempt from a fi eliberat, scutit освобождаться от
sth de ceva чего-л
solely (adv) only, exclusively
штаб-квартира,
headquarters sediu principal
главный офис
branch office filială, sucursală филиал
subsidiary enterprise compania-fiică дочерняя компания
consiliu de
board of directors совет директоров
administraţie
legal entity persoană juridică юридическое лицо
 Read the following text and do the exercises given after it

The general terms for the organizations that produce and sell goods and services are
business, enterprise, company, firm (US corporation). The word concern is used mainly to
refer to a large organization.
An enterprise is a property complex used for performing entrepreneurial activity. It
comprises all types of property used for this activity including:
 plots of land
 buildings and constructions, highway transportation facilities and rail facilities
 equipment
 inventory
 raw materials
 products
 debts
 incorporeal rights (company name, trademark, service mark).
The enterprise is an independent economic entity based on professionally organized
workforce, capable of manufacturing products demanded by consumers using capital goods
available. So, it uses economic resources for producing goods and rendering services for the
purpose of satisfying social needs. The enterprise is an institution which creates the wealth of
a country and from which this wealth is distributed among all people in a society. Regardless
of its size, an enterprise, after it is registered by the state authorities, opens an account with a
bank and becomes legally autonomous. Like people, enterprises bear certain names. Usually

enterprises are named after their owners (“Ford”, “Christian Dior”, “Nina Ricci”) or their
names reflect the type of their economic activity (“Moldcell”, “Gazprom”, “General Motors”).
An immense amount of enterprises in each country implies their classification according to
the following criteria:
1)By type of primary profit-generating activity enterprises are classified into: industrial,
agricultural, commercial, service, investment, insurance enterprises and others.
2)By the source of origin of the registered capital enterprises are classified into:
a)public enterprises – they are owned by the government. They don’t have the title to the
property available, but only exercise the control right;
 private enterprises – they belong to private individuals;
 mixed enterprises – they contain both public and private capital. Here the government
assigns the patrimony to the enterprise which has the title to the property. The
government cannot freely dispose of the enterprise’s property, it has the right to
dispose of the shares that belong to it in the enterprise;
d)enterprises with foreign investments – they can either belong entirely to a foreign
investor or have a mixed capital invested both by a foreigner and a national.
3)By number of employees enterprises are classified into:
 small enterprises – they have less than 100 employees;
 medium-sized enterprises – between 100 and 500 employees;
 large-scale enterprises – their staff exceeds 500 employees.
This classification differs from country to country: in our Republic, for example, there are
microenterprises (they employ less than 20 people), small enterprises (they have 20 – 75
employees) and large-scale enterprises (the number of their employees exceeds 75 people).
4)By form of business ownership enterprises may be:
 sole proprietorships;
 partnerships;
 corporations.
5) By the objective of the company’s activity there are:
 commercial enterprises – these are for-profit organizations which exist to earn
and redistribute taxable wealth to employees and shareholders. They are run for
the benefit of their owners.
 non-commercial enterprises – these are non-profit organizations (abbreviated as
NPOs, also known as a not-for-profit organizations). They do not distribute their
surplus funds to owners or shareholders, but instead use them to help pursue their
goals. Examples of NPOs include charities, trade unions, and educational and
public arts organizations. They are in most countries exempt from income and
property taxation and exist solely to provide programs and services that are of
 self-benefit.
Medium-sized and large-scale enterprises usually have headquarters, branch offices and
subsidiary enterprises.
Headquarters or head office is the location of the central administrative office of the
company or enterprise. It is an office where top management of the enterprise, board of
directors, secretariat and other important management departments are located. The head
office of a company deals with coordinating the regional offices and developing the global
strategy for running the business.
Branch office (from Latin filialis) is an economically autonomous subdivision of a legal
entitywhich is situated somewhere other than the firm's main office location and exercises all
or any part of the main office’s functions including the functions of the regional offices.
Branch offices are not legal entities. They are vested by the legal entities that have founded
them and operate on the basis of the adopted regulations. Branch managers are appointed by the
legal entity and act on the power of attorney basis.
Subsidiary enterprise is an enterprise set up as a legal entity by another enterprise called
holding (the parent company or promoter) by means of transferring part of its property under the
operating control of the former. The promoter of the subsidiary enterprise adopts the
organizationcharter, appoints its managerandexercisesanother kind ofproprietary rights in
relation to this subsidiary. So, the holding is a “parent company” and subsidiaries are “sister
companies” to each other. Together, the holding and its subsidiaries form a group (e.g. a
newspaper group). A large group is called a giant.
Generally, a firm starts by producing one good or service, called core business. As the
company gets bigger, it also produces other different products. A group containing a lot of
different companies in different businesses is a conglomerate (e.g. a media conglomerate). As
companies grow, they may also expand geographically. At present, many companies are
multinational with manufacturing plants and trading locations in several countries worldwide.

I. VOCABULARY PRACTICE
A). Find synonyms (1-5), antonyms (6-10) in the text to the following words and phrases:
1. staff = Staff 6. public enterprise = Private Company
2. constitution = Law 7. small enterprise = Great Company
3. to be released from sth =Is issued8. shortage = Excess
4. founder = Initiator9. tax-exempt =Branch Offices Are Subject to tax
5. factory =Industry10. Headquarters =Branch Offices

B). Find in the text English equivalents for the following:

1. marca deservirii/знак обслуживания
2. compania-fiică/дочерняя компания
3. drepturi de proprietar/правомочия собственника
4. organizaţia de binefacere/благотворительная организация
5. persoană juridică/юридическое лицо
6. cetăţean al ţării date/гражданин данной страны
7. activitatea, care aduce profit/деятельность, приносящая прибыль
8. mijloace de producţie/средства производства
II. COMPREHENSION
Give answers to the following questions:
1. What is an enterprise?
Answer : Company is a place for production activities and all production factors
gather.

2. What are the criteria according to which enterprises are classified?

Answer : *A safe and supportive work environment.Let’s start with the basics
*A boss who invests in your growth
*An understandling of your life outside of working hours
*Awards for your contributions
*Satisfaction with an achievenment

3. What is the similarity and difference between a public enterprise and a mixed one?
Answer :A mixed business is a business entity that is owned,managed and controlled by
the private sector and the government.So that both the capital and the profits to be
achieved are jointly controlled by both parties.
Private business is a business that is purely owned by the public or private parties
without any government capital in it.a business owned,managed and led by someone
who is fully responsible for the risks and activities of the company.
Conclusion
The difference between private business and mixed business is that private capital
ownership is purely private owned while mixed business capital ownership is a
combination of private and qovernment capital.
That similarity between private business and mixed business is that the ownership of
capital is used to build the company’s infrastructure so that it can streamline the
company’s activities

4. How are enterprises classified in the Republic of Moldova according to the number of
employees?
Answer :Telecommucation in Moldova is maintained at a relatively high level of
performance.Because moldova is a small country,telecommunications companies
managed to achieve good coverage in both wired and wireless communications
infrastructure

5. What is the difference between commercial and non-commercial enterprises?

Answer :The main difference between a commercial organization is the purpose of the
job.Commercial organizations work for profit,while the goal of nonprofits,first of all,is
to serve society

6. What is the similarity and difference between a branch office and a subsidiary enterprise?
Answer :Difference
 Branch offices can carry out the same business operations as the head
office.Conversely,a subsidiary may or may not carry out the same business operations
as the parent company

7. What is the difference between a group and a conglomerate?

Answer :Conglomerates are companies that diversify their business into various
untrelated industrial fields.As such,there is very little similarity between the businesses
they manage

8. What is a multinational company?

Answer :Multinational companies or PMN are companies that do business in many
countries,these companies are usually very large.Such companies have offices,factories
or branch offices in many countries.They usually have a headquarters where they
coordinate global management

Match the types of businesses with their definitions

Type of business Definition
1. Financial businesses a) deliver goods and individuals from location to location, generating a
profit on the carriage costs
2. Information businesses b) generate profit from the selling, renting, and development of
properties, homes, and buildings
3. Industrial companies c) generate profit through investment and management of capital
4. Real estate businesses d) offer intangible goods or services and typically generate a profit by
charging for labor or other services provided to government,
other businesses, or consumers
5. Retailers e) produce public services, such as heat, electricity, or sewage treatment,
and are usually government chartered
6. Service businesses f) generate profits primarily from the resale of intellectual property and
include movie studios, publishers and packaged software
companies
7. Transportation businesses g) produce products from raw materials or component parts, which they
then sell at a profit

Answer :
1) 1- c
2) 2-b
3) 3-g
4) 4–f
5) 5-e
6) 6-d
7) 7-a
 IV. DISCUSSION
1. What qualities are needed for a manager of an enterprise in order to make the enterprise
function more efficiently and have a bigger profit?
Answer : Identify problems in business,involve all parties,use digital,integration,build
community,dare to take risks,share work properly,take advantage of
technology

2. Which enterprise is easier to manage: a small or a large-scale one? Give your reasons.
Answer :In our opinion,when viewed from the employee’s own perspective,working in
a small company offers quite a big advantage,namely being able to explore
capabalities there.Apart from that,exmployees are required to be
initiative,willing to learn,and willing to take on even greater
responsibilities.Sometimes,helping other divisions must be done to get the
job done.For this reason,quite a number of young people choose to enter
small companies first so that they can increase their skills faster than
directly entering large companies.

3. Which enterprises are more profitable: public or private ones?

Answer :Private sector power is market power,so market forces will force people to
buy or exit the market.The private sector can charge different prices for
different customers and this will not invite protests in the from of
demonstrations.However,if the government as a public service provider
organization raises the price of public services,for example fuel prices,basic
electricity and telephone rates,PDAM rates,then thiss will invite a strong
reaction from the public.This,it is confirmed that private companies are
more profitable and public companies are still less competitive with private
companies in several sectors.

4. Give examples of public enterprises in your country. What effect do you think privatization
would have on these organizations and on the services they provide?
Answer :Public companies (BUMN).In our opinion,privatization has a significant
effect on the performance of privatized SOEs,but in a negative
direction.Ownership of BUMN shares by foreign investors will improve the
performance of privatized BUMNs.Meanwhile government ownership of
BUMN has no significant effect on the performance of privatized BUMNs.

5. What do you know about corporate raid? What methods are used by corporate raiders?
Answer :Company raids must have their own reasons.It is possible that the raided
company does not have a business license or is illegal,which just wants to
make a profit without registering its business in order to avoid the tax that
has been set.It could be that the corruptors argue by increasing welfare,but
 there is a veiled intrntion where these is a veiled intention where these
elements want to make a profit on their own.

6. Give examples of enterprises with foreign investments in your country. What is your point
of view concerning the fact that foreigners acquire our national enterprises?
Answer : An example of company with foreign investment is softBank,if an investor
acquires a domestic company because he previously invested in the
company,in our opinion this can happen because the investor wants to
control the company slowly but surely by continuing to invest so that the
company continues.Operate.But there is a desire for complete ownership of
the company that the company is not aware of.Because if we look back at the
meaning of acquisition,namely the transfer of ownership of a company that
the meaning of acquisition,namely the transfer of ownership of a company
or assets (in the banking industry there are puchases of shares above
50%),take over of owner ship of companies or assets.Or how to enlarge the
company by owning another company.

7. Why do so many non-profit organizations exist in our today’s world where everybody
pursues the goal of making profit? The institution in which you are studying - is it a
commercial or non-commercial organization?
Answer : Non profit companies are companies that do not prioritize profit,so if
currently there are many people who provide non-profit organizations by
prioritizing profit,it a means that the organization is a non-profit profit
organization. Commercial organizations

V. Complete the text below with the following words:

Board, buys, enhance, friendly, launch, persuade, poison pill, sell, white knight,
hostile

A firm that wants to take over another company can (1) Buy__ a raid, that is, it simply
(2) Selling__ a large quantity of shares of the target company in the stock market. A “dawn
raid” consists of buying shares early in the morning, before the market has time to notice the
increasing price. This will immediately (3)Board___ the share price, and may (4)_Enemies__ a
sufficient number of shareholders to (5)Coax___ , for the raider to take control of the target
company.
If a raid is not successful, a predator can make a takeover bid: a public offer to the
company’s shareholders to buy their shares at a particular price during a particular period. A
(6)_Pil Poison___ takeover has the consent of the directors of the target company; a
(7) Improve__ takeover bid is one undertaken against the wishes of the (8)_friendly__ of
directors. Defence against a hostile takeover includes the (9) Launch___ - a protective action
taken to repel a raider, such as spending all the company’s cash reserve, in order to make it less
attractive. If such measures do not work, the company attempts to find a (10)_The white
Knight__ - another buyer whom they prefer.