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  1. Read the passage and fill in the gaps with the following words (the words may be used more than once):

    1. then c) also e) both ... and

    2. and d) although

Prices have risen throughout the national economy since 1954. Between 1948 and 1953, there was a period of price stability. (1)… in 1960 the government decided to change the national policy considerably (2)… to introduce certain price controls (3)… controls were not very popular with industrialists. The government (4)… tried to reduce demand by limiting increases in wages throughout the economy (5)… limitation of wages was not very popular with the trade unions. This limitation of wage increases applied to (6) … the public … private sectors. An official Commission was created to regulate wage (7)… price increases. It was called the national prices (8)… wages board or NPWB.

Text b

PRE-READING

1. Read these headlines. Suggest what they could mean. What do they tell you? Having read these headlines can you guess what the text is going to be about?

Fixed Prices: Accept Or Bargain?

How Long Can a Commodity Satisfy a Want?

Is There Any Compensation?

The More You Buy The Less You Want

2. Read the text and choose the heading which from your point of view suits best:

In most economic systems, the prices of the majority of goods and services do not change over short periods of time. In some systems it is of course possible for an individual to bargain over prices, because they are not fixed in advance. In general terms, however, the individual cannot change the prices of the commodities he wants. When the consumer plans his expenditure, he must therefore accept these fixed prices. He must also pay this same fixed price no matter how many units he buys. A consumer will go on buying bananas for as long as he continues to get satisfaction. If he buys more, he shows that his satisfaction is still greater than his dislike of losing money. With each successive purchase, however, his satisfaction compensates less for the loss of money.

A point in time comes when the financial sacrifice is greater than the satisfaction of eating bananas. The consumer will therefore stop buying bananas at the current price. The bananas are unchanged; they are neither better nor worse than before. Their marginal utility to the consumer has, however, changed. The higher the price is the fewer he buys. The lower the price is the more he buys.

It is clear that the nature of a commodity remains the same, but its utility changes. This change indicates that a special relationship exists between goods and services on the one hand, and a consumer and his money on the other hand. The consumer’s desire for a commodity tends to diminish as he buys more units of that commodity. Economists call this tendency the Law of Diminishing Marginal Utility.

1. The following are dictionary definitions of words or phrases in the text. Guess what these words are.

  1. to negotiate a sale;

  2. the total amount of money that is spent on something;

  3. additional units added to a consumer’s stock of a commodity give progressively less satisfaction

  4. basic quality or character;

  5. being likely to do smth;

  6. the way in which two things are connected.

  7. something that you buy;

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