Ex. 10. Join the halves of the sentence
| 1. The word “micro” means small, | a. demand, supply and market equilibrium. |
| 2. The distribution of products and income among all these units | b. enable these supplies and demands to interact |
| 3. Microeconomics theory is used widely | c. aggregate employment and unemployment. |
| 4. The central components of microeconomics are | d. is also analyzed by microeconomics. |
| 5. Market equilibrium refers to how markets | e. small, and microeconomics means economics in the small |
| 6. Macroeconomics turns from household income | f. in many areas of applied economics. |
| 7. Macroeconomics deals with | g. steady growth in national output. |
| 8. Macroeconomic theory is largely concerned with | h. to nationalincome |
| 9. The key to prosperity in an economy is | i. with what determines the size of gross national product (GNP) |
Ex. 11. Answer the questions.
1. What does the word “micro” mean?
2. What questions does microeconomics deal with?
3. What questions does microeconomics address?
4. The distribution of products and income among the units is analyzed by microeconomics,
isn’t it?
5. In what areas of applied economics is microeconomics theory used?
6. What are the central components of microeconomics?
7. When did microeconomics questions dominate in economics?
8. What economic factors does macroeconomics deal with?
9. What questions does macroeconomics address?
10. What is macroeconomics theory largely concerned with?
11. What is GNP?
12. What is the key to prosperity in a economy?
13. When does the well-being of the population of a country improve?
GRAMMAR FOCUS
Ex. 12. Make the sentences passive.
1. People first used precious metals as money on the basis of weight.
2. We determine the price of the product by the interaction of demand and supply.
3. The government will increase the standard of living of the population.
4. Their new manager has offered them a considerable increase in salary.
5. Nature provides all the natural resources.
6. The state must supply public goods.
7. They are testing the equipment at their plant at the moment.
8. At the previous lessons we have discussed some economic issues.
9. The classical economists regarded money as no more than a medium of exchange.
10. We had established business relations with the firm by 2005.
Ex. 13. Complete the following sentences by putting the verbs into either the Present
Perfect r the Past Simple.
1. We _____________ (reach) our targets last year.
2. Sales ________________(fall) since the beginning of June.
3. Contracts ______________________ (be signed) but work __________________(begin) yet.
4. The marketing department _________________(recruit) two new assistants so far this year.
5. We _____________ the advertising campaign last month and since then sales _____________
(rocket).
6. Our research __________________(be carried out) last year but still _____________(not see)
the results.
7. Turnover _________________(rise) dramatically since we _________________(be founded).
8. We ______________(expect) a fall in profits last year as our costs nearly ________________
(double).
9. We _____________________already (sell) more units this year than we ___________(do) in
the whole of last year.
10. He ____________ (feel ) we should ____________________(not take on) so many
salespeople last year.
UNIT 5 MAIN ECONOMIC LAWS
DISCUSSION
Discuss these questions with your group mates.
1. Some people get a lot of pleasure from being well-dressed, some from spending holidays at luxury resorts, some from food, some from the knowledge that the family is well-provided for. And what do youget a pleasure of? What comes first, second, third … in your scale of preferences (essential goods – food, shelter, clothing, luxuries; non-essentials – holidays, parties, visits to cinemas and theatres, etc.)?
2. How must all of us as customers reconcile our likes and dislikes with our budgets?
3. Do you think that it has become traditional in former Soviet republics to have a stock of such storable goods as salt, sugar, soap and matches? When and why do people increase their demand for particular goods and stock them up?
4. Does everything have a price? Are there some things you would not do regardless of price? (Remember: price and money are not synonyms; prices may be nonmonetary).
Text 1
THE LAW OF DEMAND
VOCABULARY
| competitor- конкурент supply and demand – спрос и предложение to charge the price – устанавливать, назначать цену consumer – потребитель effective demand– платежеспособный спрос an influence - влияние willingness and ability – готовность и способность relationship – связь, взаимоотношение quantity – количество | all else remaining equal – когда все остальное остается без изменений enjoyment - удовольствие to diminish -уменьшаться diminishing marginal utility – убывающая предельная полезность will result –явится результатом to be relevant – относиться to cause – заставлять to reduce – снизить substitutes– заменители complements– дополнители to influence – влиять |
How are prices determined in the free market?
The price is determined by the interaction of demand for and supply of the product. If there are many competitors in a market, this will mean that businesses have to charge the market price for their products.
If a farmer produced rice, he would take the rice to market and sell it for the price that rice was selling for in that market. The farmer could not charge a much higher price because no one would buy his rice - consumers would buy from other farmers who were charging the lower market price.
To understand how price is arrived at, demand and supply will be looked at separately.
What is meant by demand?
The first thing to understand is that demand is not the same thing as desire, or need, or want. Demand is not just what people want to buy, they must also have money to be able to purchase the product. Only when desire is supported by the ability and willingness to pay the price it becomes an effective demand and has an influence in the market.
The demand for a product depends on how much is charged for the product. If the price increases, normally fewer will be bought and if the price goes down, more will be demanded.
Demand is a consumer’s willingness and ability to buy a product or service at any given price, at a particular time and place.The law of demand describes the relationship between the prices of a good or service and the quantity consumers will buy. This means that all else remaining equal, more goods and services will be sold at a lower price than at a higher price.
Let’s see the law of demand from the point of ice cream selling.
The first ice-cream consumed at the baseball game is great; the second is good; the third one is fair; the forth one was “too much”; and the fifth one made you sick. Clearly we would not like to pay as much to feel sick (the fifth ice-cream) as we would pay to feel great (the first ice-cream). So, sooner or later, we reach the point where enjoyment decreases with every bite no matter how low is the cost. What is true of ice-cream applies to almost everything we consume. After a certain point is reached, the satisfaction from a good or service will begin to diminish. Economists describe this effect as diminishing marginal utility. “Utility” refers to the usefulness of something.
Diminishing marginal utility helps to explain why lower prices are needed to increase the quantity demanded. Since your desire for a second ice-cream is less than it was for the first, you are not likely to buy more than one, except for the lower price. So, a decrease in demand will result in decrease of a market price. And on the contrary, an increase in demand will result in an increase in the market price.
To summarize: the law of demand states that in general, other things remaining equal, the lower the price of a good – the greater the quantity of that good buyers are willing and able to buy over a given period. Conversely, the higher the price of a good – the less the quantity of that good buyers will buy. This law is relevant to all goods and services.
Changes in Demand. What are some of the factors that would cause the demand for ice-cream, or any other product, to increase or to decrease ?
They are the following:
1. Changes in consumer income.
If consumer’s income falls, there will be less demand for many products. When consumers have less money to spend, they will reducetheir demand for products.
Changes in the prices of substitutes.
These are bought and used in place of another product. Assuming potatoes and macaroni foods are substitute products. If the price of macaroni foods falls then more potatoes will be bought and demand for macaroni foods will fall.
3. Changes in the prices of complements.
These are products that are often bought and consumed together. Assuming coffee and milk are complements; if the price of coffee rises, then less coffee will be bought and therefore will be less demand for milk.
4. Changes in consumer’s tastes or fashion.
If a product becomes more popular, demand will increase.
5. Changes in advertising.
If there has been a successful advertising campaign, for example for a particular brand of sports shoes, the demand will increase.
The demand for particular goods can be influenced by weather, demographic trend, taxes and other factors.
WORD STUDY
Ex. 1. Study the different meanings of the following words and use them to translate the sentences:
a) demand (n) 1. требование
2. спрос
demand (v) - требовать, предъявлять требования
to be in (great) demand - пользоваться (большим) спросом
to meet (to satisfy) the demand - удовлетворять спрос
1. Demand keeps pace with supply.
2. The supply exceeds the demand.
3. The government turned down (отвергать) the miners’ demand.
4. These shoes are in great demand.
5. Demand is indicated by our willingness to offer money for particular goods and services.
6. Let’s assume that producers supply enough to meet demand without any change in the price level.
7. One of the main objectives which our government sets nowadays is to meet the demand of the population in qualitative goods and services.