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Part I
TOPIC 1: ECONOMIC SYSTEMS
TEXT
The survival of any society depends on its ability to provide food, clothing and shelter for its people. Since these societies are also faced with scarcity decisions concerning What, How and for Whom to produce must be made.
All societies have something else in common. They have an economic system or an organized way of providing for the wants and needs of their people. The way in which these decisions are made will determine the type of economic system they have. There are three major kinds of economic systems: traditional, command and market.
Traditional Economy
In a society with a traditional economy nearly all economic activity is the result of ritual and custom. Habit and custom also prescribe most social behaviour. Individuals are not free to make decisions based on what they want or would like to have. Instead, their roles are defined. They know what goods and services will be produced, how to produce them, and how such goods and services will be distributed.
An example of traditional economy is the society of polar eskimo of the last century. For generations, parents taught their children how to survive in a harsh climate, make tools, fish and hunt. Their children, in turn, taught these skills to the next generation. The main advantage of the traditional economy is that everyone has a role in it. This helps keep economic life stable and community life continuous. The main disadvantage of the traditional economy is that it tends to discourage new ideas and even punishes people for breaking rules or doing things differently. So it tends to be stagnant or fails to grow over time.
COMMENTS
1. social behaviour
2. polar eskimo
3. to discourage
4.... tends to be stagnant
5.... fails to grow over time
VOCABULARY EXERCISES
I. Give the corresponding nouns to the following verbs:
to survive, to depend on, to provide, to prescribe, to decide, to distribute, to determine, to organize, to generate, to behave, to define, to know, to punish, to tend, to grow, to direct.
II. Find equivalents:
1. to make decisions a.
2. to have smth. in common 6.
3. economic system .
4. traditional economy r.
5. command economy .
6. market economy e.
7. social behaviour .
8. major kinds .
9. for generations .
10. main advantage .
11. main disadvantage i.
12. to make tools .
III. Match the synonyms:
decision, approximately, produce, shelter, to make, type, habitation, as, the community, major, concerning, to produce, the society, main, nearly, about, kind, since, product, solution.
IV. Match the antonyms:
scarcity, last, advanced, to produce, to discourage, next, stagnant, stable, to encourage, to distribute, disadvantage, to accumulate, uncommon, advantage, to consume, unstable, common, abundance.
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V. Match each term in Column A with its definition in Column B:
Column A Column B
1. economic system a. An economic system that allocates scarce
resources according to custom.
2. traditional economy b. An economic system in which major decisions
concerning the allocation of resources are
made by agencies of the government.
3. command economy c. The approach a country uses to deal with
scarcity and achieve its economic goals.
4. business d. The production, distribution, and sale of
goods and services for a profit.
5. consumer e. The rivalry among buyers and sellers in
the purchase and sale of resources and products.
6. competition f. A person who buys and uses goods or services.
7. market g. The difference between revenues and operation
costs incurred by a business.
8. profit h. Place where buyers and sellers come together to
conduct transactions.
VI. Answer the following questions:
1. What does the survival of any society depend on?
2. What are all societies faced with?
3. What have all societies in common?
4. What determines the type of economic system?
5. What are the major kinds of economic systems?
6. What prescribes most social behaviour?
7. What is the role of individuals in a traditional economy?
8. What did polar skimo teach their children?
9. What is the main advantage/disadvantage of the traditional economy?
TOPIC 2: MARKETS and MARKET STRUCTURE
TEXT
Economists classify markets according to conditions that prevail in them. They ask questions like the following: How many supplies are there? How large are they? Do they have any influence over price? How much competition is there between firms? What kind of economic product is involved? Are all firms in the market selling exactly the same product, or simply similar one? Is it easy or difficult for new firms to enter the market? The answer to these questions helps to determine market structure, or the nature and degree of competition among firms operating in the same market. For example, one market may be highly competitive because a large number of firms produce similar products. Another may be less competitive because of fewer firms, or because the products made by each are different or unique.
In short, markets can be classified according to certain structural characteristics that are shared by most firms in the market. Economists have names for these different market structures: pure competition, monopolistic competition2, oligopoly, and monopoly.
An important category of economic, markets is pure competition. This is a market situation in which there are many independent and well-informed buyers and sellers of exactly the same economic products. Each buyer and seller acts independently. They depend on forces in the market to determine price. If they are not willing to accept this price, they do not have to do business.
To monopolize means to keep something for oneself. A person who monopolized a conversation, for example, generally is trying to stand out from everyone else and thus attract attention.
A situation much like this often exists in economic markets. For example, all the conditions of pure competition may be met except that the products for sale are not exactly the same. By making its product a little different, a firm may try to attract more customers and take over the economic market. When this happens, the market situation is called monopolistic competition.
The one thing that separates monopolistic competition from pure competition is product differentiation. The differences among the products may be real, or imaginary. If the seller can differentiate a product, the price may be raised a little above the market price, but not too much.
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COMMENTS
1. monopolistic competition
2. to keep something for oneself
3. to stand out from /
4. to attract attention
5. to take over the economic market
6. product differentiation ()
VOCABULARY EXERCISES
I. Find equivalents:
1. to depend on smth a.
2. in short 6.
3. to attract more customers b.
4. to stand out from smth .
5. to prevail .
6. a highly competitive market e.
7. pure competition .
8. to have some influence over price .
9. to enter the market 3.
10. to keep smth for oneself .
11. to take over the economic market i.
12. to meet the condition of pure .
competition
II. Match the synonyms:
a customer, significant, to prevail, to attract smb's attention, a supply, next, in accordance with smth, following, to draw smb's attention, to be ready to do smth, to predominate, to determine price, a buyer, to meet the conditions of pure competition, to fix a price, to be willing to do smth, according to smth, important, a stock, to agree to the conditions of pure competition.
III. Match the antonyms:
similarity, ordinary, easy, dependent, imaginary, to separate, difference, to attract smb, to accept, independent, difficult, buyer, unique, to reject, seller, to unite, real, to scare smb away/off.
IV. Match each term with its definition:
1. monopoly a. The process of creating uniqueness in a
product.
2. oligopoly b. A market dominated by a few large firms.
3. pure competition c. A market in which there is only one seller.
4. monopolistic competition d. Place where buyers and sellers come together.
5. product differentiation e. The price at which supply exactly equals demand
6. competition f. A market situation in which there are many
independent and well-informed buyers and sellers
of exactly the same economic products.
7. market g. The rivalry among buyers and sellers in the
purchase and sale of resources and products.
8. market price h. A market in which many firms are selling similar
(but not identical) products.
V. Ask someone:
If markets can be classified according to certain structural characteristics that are
shared by most firms in the market; each buyer or seller acts independently in
the market; a firm may try to attract more customers and take over the economic
market;
what helps to determine market structure; is the difference between highly and less
competitive market; situation is called monopolistic competition; separates
monopolistic competition from pure competition;
when the price may be raised a little above the market price;
how economists classify markets.
TOPIC 3: DEMAND
TEXT
Most people think of demand as being the desire for a certain economic product. That desire must be coupled with the ability and willingness to pay. Effective demand, that is desire plus ability and willingness to pay, influences and helps to determine prices.
In economics the relationship of demand and price is expressed by the Law of Demand. It says that the demand for an economic product varies inversely with its price. In other words, if prices are high the quantities demanded will be low. If prices are low the quantities demanded will be high.
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The correlation between demand and price does not happen by chance. For consumers price is an obstacle to buying, so when prices fall, the more consumers buy.
The demand for some products is such that consumers do care about changes in price when they buy a great many more units of product because of a relatively small reduction in price. The demand for the product is said to be elastic.
For other products the demand is largely inelastic. This means that a change in price causes only a small change in the quantity demanded. A higher or lower price for salt, for example, probably will not bring about much change in the quantity bought because people can consume just so much salt.
Even if the price were cut in half, the quantity demanded might not rise very much. Then too, the portion of a person's yearly budget that is spent on salt is so small that even if the price were to double, it would not make much difference in the quantity demanded.
COMMENTS
1. to be coupled with
2. inversely
3. by chance
4. to bring about
5. if the price were cut in half
6. were to double
VOCABULARY EXERCISES
I. Find equivalents:
1. the Law of Demand a.
2. to be coupled with 6.
3. to bring about .
4. by chance r.
5. to determine prices .
6. ability and willingness to pay e.
7. effective demand .
8. reduction in price .
9. inversely .
10. changes in price .
11. in other words .
12. the quantity demanded .
II. Match the synonyms:
by chance, to double the price, an obstacle, to consider, efficient, to cut in price, to bring about, to happen, by accident, a relationship, to cause, effective, to raise the price a hundred per cent, a barrier, to think, to occur, a correlation, a reduction in price.
III. Match the antonyms:
Ability, higher price, to cut, to supply, to demand, inelastic, to consume, to raise, least, to couple, small, large, inversely, to part, incapacity, to produce, most, elastic, directly, lower price.
IV. Match each term with its definition:
1. demand a. Money value of a good or service.
2. the Law of Demand b. The graphical representation of the demand function.
3. consumer c. explains how much a change in price affects the
quantity demanded.
4. price d. good or service whose consumption is seen as essential
in order to maintain a minimum standard of living in a society.
5. demand curve e. a consumers willingness an ability to buy a product or
service at a particular time and place.
6. demand elasticity f. anyone who uses goods or services.
7. purchasing power g. all else being equal, more items will be sold at a low
price than at a higher price.
8. necessity h. the value of a unit of money measured in terms of what
it can buy.
V. Answer the following questions:
1. What do most people think of demand?
2. What is an effective demand?
3. What does it help to do?
4. What is expressed by the Law of Demand?
5. What does the Law of Demand?
6. The correlation between demand and price?
7. Is price an obstacle to buying for consumers?
8. What does the elastic demand consist in?
9. What does the inelastic demand for products mean?
TOPIC 4: SUPPLY
TEXT
Business people think of demand as the consumption of goods and services. At the same time, they think of supply as their production. As they see it, supply means the quantity of a product supplied at the price prevailed at the time. Economists are concerned with market as a whole. They want to know how much of a certain product sellers will supply at each and every possible market price. Supply may be defined as a schedule of quantities that would be offered for sale at all of the possible prices that might prevail in the market. Everyone who offers an economic product for sale is a supplier.
The law of supply states that the quantity of an economic product offered for sale varies directly with its price. If prices are high suppliers will offer greater quantities for sale. If prices are low, they will offer smaller quantities for sale. Since productivity affects both cost and supply it is important that care can be taken in selecting the proper materials. Productivity and cost must be kept in mind in order to make the best decision. It means a business must analyse the issue of costs before making its decisions. To make the decision-making process easier we try to divide cost into several different categories.
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Fixed cost the cost that a business incurs even if the plant is idle and output is zero. It makes no difference whether the business produces nothing, very little, or a lot. Fixed costs include salaries paid to executives, interest charges on bonds, rent payments on leased properties, local and state property taxes. They also take in depreciation the gradual wear and tear on capital goods over time.
Variable cost a cost that changes with changes in the business rate of operation or output.
Total cost - is the sum of the fixed and variable costs. It takes in all the costs a business faces in the course of its operations.
Marginal cost the extra or additional cost incurred when a business produces one additional unit of a commodity. Since fixed costs do not change, marginal cost is the increase in variable costs, which stems from using additional factors of production.
COMMENTS
1. to be concerned with smth
2. ... care can be taken ...
3. to keep in mind
4. decision-making process
5. fixed cost
6. interest charges on ...
7. leased properties
8. wear and tear on capital goods
9. variable cost
10. total cost
11. marginal cost
VOCABULARY EXERCISES
I. Give the corresponding nouns to the following verbs:
a) to offer, to process, to supply, to change, to demand, to care, to price, to tax, to cost, to produce, to increase, to market, to state;
b) to consume, to differ, to select, to decide, to divide, to sell, to execute, to define, to depreciate, to lease, to operate, to pay, to analyse.
II. Find equivalents:
1. consumption of goods and services a.
2. at the same time 6.
3. to be concerned with smth .
4. to take in depreciation r.
5. schedule of quantities .
6. to prevail in the market e.
7. decision-making process .
8. issue of cost .
9. fixed cost .
10. variable cost .
11. total cost .
12. marginal cost .
. Match each term in Column A with its definition in Column B:
Column A Column B
1. supply a. The additional cost of producing an extra unit of output.
2. total costs b. Everyone who offers an economic product for sale.
3. the Law of Supply c. Costs that increase as the number of units
produced increases.
4. variable costs d. A table showing the quantities of a product that
would be offered for sale at various prices at a given time.
5. supply schedule e. Number of items offered for sale at each of
several prices.
6. marginal cost f. Sellers will offer more of a product at a higher
price and less at a lower price.
7. supplier g. Costs that remain the same regardless of
the amount of business done by the firm.
8. fixed costs h. The sum of the fixed and variable costs.
IV. Answer the following questions:
1. What do business people think of demand (supply)?
2. What does the term supply mean?
3. Whom do we call a suppler?
4. What does the Law of Supply state?
5. Why is it important for business to analyze the costs?
6. What categories is the cost divided into?
7. What is fixed cost?
8. What do fixed costs include?
9. What is variable cost?
10. Total cost is the sum of the fixed and variable costs, isnt?
11. What do you know about marginal cost?
SELF-STUDY WORK
TEXT A
Translate the text with the dictionary in written form:
Mixed Economy
There are three types of management in economies. An economy may be almost totally planned, as it was in the Soviet Union. An economy may be almost totally unplanned, as it is in the USA. Or an economy may be a combination of planning and freedom of operation. Examples of the latter are Japan and South Korea.
In a planned economy the government decides what goods are to be produced and how they are to be marketed. Governments set all the priorities, and the producers are to follow the directions given to them.
In a partially planned economy such as Japans, the government often encourages industry and helps it with subsidies. Government also makes investments and regulates trade.
The United States is an example of an unplanned economy. But it has a lot of government intervention in economic activity. As the economy of the United States grew, and as government and its importance increased, the government policy at every level acquired greater importance for the economy.
But the economy of the United States may be called unplanned because the government does not regulate what will be produced and how it will be marketed. These decisions are left to the producers. Even the great amount of government regulation that has emerged since the Great Depression has not turned the economy of the United States into a planned economy.
The name of the American economic system is capitalism. Another name for it is the free market economy.
TEXT B
Read the text and say whether the statements given below the text are true or false and if they are false say why.
Market
The term market, as used by economists, is an extension of the ancient idea of a market as a place where people gather to buy and sell goods. In former days part of a town was kept as the market or marketplace, and people would travel many kilometers on special market-days in order to buy and sell various commodities.
Today, however, markets such as the world sugar market, the gold market and the cotton market do not need to have any fixed geographical location. Such a market is simply a set of conditions permitting buyers and sellers to work together.
In a free market, competition takes place among sellers of the same commodity, and among those who wish to buy that commodity. Such competition influences the prices prevailing in the market. Prices inevitably fluctuate, and such fluctuations are also affected by current supply and demand.
Whenever people who are willing to sell a commodity contact people who are willing to buy it, a market for that commodity is created. Buyers and sellers may meet in person, or they may communicate in some other way; by telephone or through their agents. In a perfect market, communications are easy, buyers and sellers are numerous and competition is completely free. In a perfect market there can be only one price for any given commodity; the lowest price which sellers accept and the highest which consumers will pay. There are, however, no really perfect markets, and each commodity market is subject to special conditions. It can be said, however, that the price ruling in a market indicates the point where supply and demand meet.
Comments
Free market , ;
Commodity market ;
True or false statements:
1. The ancient idea of a geographically fixed marketplace has been extended to cover sets of conditions which permit buyers and sellers to work together.
2. A market for a commodity is created whenever buyers and sellers meet in person but not when they work through their agents.
3. Supply and demand inevitably affect prevailing prices.
4. The world cotton market is not located in any special place.
5. The composition between buyers of a commodity influences the prevailing prices.
6. Composition in a perfect market is conducted in a completely free way by numerous buyers and sellers enjoying easy communications.
7. The lowest price which buyers will offer is the only price in a perfect market.
8. Each commodity market is imperfect in some special way.
TEXT C
Translate the text with the dictionary in written form and say whether the statements given below the text are true or false and if they are false say why.
