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8. Supply the missing articles where necessary:

EXAMPLE: There is … supply of steel. … supply of steel is increasing.

There is a supply of steel. The supply of steel is increasing.

  1. There is … shortage of bananas. … shortage of bananas will continue for some weeks.

  2. There has been … change of government. … change in government will probably mean a change of policy. … change of policy may lead to … short period of instability. … short period of instability could create … feeling of insecurity.

  3. The speaker suggested … special commission to study economic conditions. He said that … special commission should examine all aspects of national economic life. … commission should investigate … demands of … workers and … conditions under which they work. It should also hear … views of … employers. Such … commission would render … very valuable service to … nation.

TEXT B

PRE-READING

  1. Discuss the following question in small groups:

Why do people tend to buy more of a good when its price falls?

2. Read the text and check your answers:

In economics, the word ‘demand’ refers to a consumer’s desire for a good together with his willingness and ability to pay the price of that good or service. The important point is that firms will only continue to supply goods and services if they can sell them at prices which cover their costs. So there will be a supply of a good or a service only if there is a demand for it.

Demand is defined as the quantity demanded at any given price over some given period of time. With very few exceptions, the quantity of a demanded good increases as the price decreases. The Law of Demand states, ’Other things being equal, more will be demanded at lower prices than at higher prices.’

So we can say that demand is indicated by our willingness to offer money for particular goods and services. Money has no value in itself, but serves as a means of exchange between commodities which do have a value to us.

People seldom have everything they want. Usually we have to decide carefully how to spend our income. When we exercise our choice, we do so according to our personal scale of preferences. In this scale of preferences essential commodities come first (food, clothing, shelter, medical expenses, etc.) then the kind of luxuries which help us to be comfortable (special furniture, telephone, insurance etc.) and finally non-essentials which give us personal pleasure (holidays, parties, chocolates, Hi-Fi, etc.). They may all seem important, but their true importance can be measured by deciding which we can live without. Our decisions indicate our scale of preferences and therefore our priorities.

All companies know that they will sell more goods if they lower their prices, and that they are likely to sell less if they raise their prices. And whether the total profit will increase or decrease depends upon the elasticity of demand. Demand is elastic when a small change in price has a relatively large effect on the quantity demanded; it is inelastic when a small change in price has a relatively small effect on the quantity demanded.

PRACTICE

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