English guide for economists and managers (руководство на английском языке для экономистов и менеджеров). Учебное пособие

c) Find a partner, read your sentences and ask him (her) to translate them into Russian. Then change your roles.

Task 3. Make up 4 questions of different types on the Text A and ask your partner to answer them. Mind the grammar and choose an auxiliary verb according to the Tense in each question. Change your roles.

Example:

-Is planned economy also known as command economy and centrally planned economy? (general question) Yes, it is / No, it is not.

-What is supply? (special question) Supply is …

-Do «hands off» economic systems give more power to certain private individuals or corporations? (alternative question) «Hands off» economic systems give …

-Traditional economy does not take advantage of technology, does it? (tag question) Yes, it does/No, it does not.

Writing

Write the annotation on the text «Economic environment» (not less than 10–12 sentences). Use some language clichés:

1.The title (heading) of the text / article is …

2.The author of the text / article is …

3.It was published in …

4.The main idea of the text / article is …

5.The text / article is devoted to …

6.The text / article deals with / focuses on…

7.The purpose of the text/article is to give the reader some information to compare … / to provide the reader with some material, data, etc…

8.The text / article is divided into … parts.

9.The first part deals with … .

10.The second part includes the facts on … .

11.The author (states, stresses, thinks, points out) that … .

12.According to the text / article … .

13.Further the author reports (says) that … .

14.In conclusion the text / article proves that … .

41

15.The author comes to the conclusion that … .

16.I found the text/article interesting / important / dull / of no value / easy / too hard to understand/to read, etc.).

UNIT V

SUPPLY AND DEMAND

Starting up

Before studying the material of Unit V, read and memorize some basic and important definitions of the terms.

Supply:

–the amount of something that is available to be used (countable);

–the process or system by which something is provided to a person, place, etc. (uncountable);

–the quantities of goods or services that are offered for sale at a particular time or at one price (uncountable).

Demand:

–the quantities of goods or services that are offered for sale at a particular time or at one price (uncountable);

–an act of demanding or asking something especially with authority (countable);

–the quantity of a commodity or service wanted at a specified price and time (uncountable).

Price:

–sum of money for which something is (to be) sold or bought;

–the amount of money for which one unit of goods or services is exchanged.

Cost:

–price (to be) paid for a thing; that which is used, needed or given to ob-

tain something.

42

While reading the Text of this Unit, you’ll find these words and expressions. They will be given as italicized ones. You may also consult any English-Russian dictionary.

Vocabulary

Task 1. While reading the text «Supply and Demand» find the following English phrases in it and a) give Russian equivalents for them; b) make verbs from the underlined nouns; c) say what goods always have strong demand in every country and what the price is.

Economic model of price determination, a competitive market, the quantity supplied, additional output, by its very nature, to have no influence over, all determinants of demand, number of suppliers, related goods and services, consumers’ expectations.

43

Task 2. Find antonyms among the following words. Give translation of them. Time for doing this task is limited – 5 minutes. Mind the time.

To require, low, to buy, short, to exit, different, to receive, less, to get, shortage, to change, long, to send, more, to enter, surplus, to sell, to sustain, same, high.

Task 3. Choose any 5 words from the list below) and make your own word combinations, using them.

Example: current events (текущие события), in microeconomics (в микроэкономике), etc.

Microeconomics, current, surplus, quantity, technology, schedule, hypothetical, distinguish, competitors, consumption, opportunity.

Task 4. Define what parts of speech the following words are.

Equilibrium, quantity, higher, demand, firm, decrease, output, technological, market, influence, equal, supplier.

Reading

Task 1. Discuss these questions in pairs.

a)What goods and services are always in demand among young people?

b)What usually happens if demand for a product exceeds supply?

c)What factors influence on the increasing demand for a product?

Text. Supply and Demand

Introduction. In microeconomics, supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers (at current price) will equal the quantity supplied by producers (at current price), resulting in an economic equilibrium for price and quantity.

The four basic laws of supply and demand are:

1. If demand increases and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price.

44

2.If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower equilibrium price.

3.If demand remains unchanged and supply increases, a surplus occurs, leading to a lower equilibrium price.

4.If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher equilibrium price.

Equilibrium. It is defined to be the price-quantity pair where the quantity demanded is equal to the quantity supplied, represented by the intersection of the demand and supply curves.

Market Equilibrium is a situation in a market when the price is such that the quantity that consumers demand is correctly balanced by the quantity that firms wish to supply.

Supply schedule. A supply schedule is a table that shows the relationship between the price of a good and the quantity supplied. A supply curve is a graph that illustrates that relationship between the price of a good and the quantity supplied.

Under the assumption of perfect competition, supply is determined by marginal cost1. Firms will produce additional output while the cost of producing an extra unit of output is less than the price they would receive.

By its very nature, conceptualizing a supply curve requires the firm to be a perfect competitor, namely requires the firm to have no influence over the market price. This is true because each point on the supply curve is the answer to the question «If this firm is faced with this potential price, how much output will it be able to and willing to sell?» If a firm has market power, its decision of how much output to provide to the market influences the market price, then the firm is not «faced with» any price, and the question is meaningless.

Economists distinguish between the supply curve of an individual firm and between the market supply curve. The market supply curve is obtained by summing the quantities supplied by all suppliers at each potential price. Thus, in the graph of the supply curve, individual firms’ supply curves are added horizontally to obtain the market supply curve.

Economists also distinguish the short-run market supply curve from the long-run market supply curve. In this context, two things are assumed constant by definition of the short run: the availability of one or more fixed inputs (typically physical capital), and the number of firms in the industry. In the long run, firms have a chance to adjust their holdings of

45

physical capital, enabling them to better adjust their quantity supplied at any given price. Furthermore, in the long run potential competitors can enter or exit the industry in response to market conditions. For both of these reasons, long-run market supply curves are flatter than their shortrun counterparts.

The determinants of supply are:

1.Production costs, how much a good costs to be produced.

2.The technology used in production, and / or technological ad-

vances.

3.Firms’ expectations about future prices.

4.Number of suppliers.

Demand schedule. A demand schedule, depicted graphically as the demand curve, represents the amount of some good that buyers are willing and able to purchase at various prices, assuming all determinants of demand other than the price of the good in question, such as income, tastes and preferences, the price of substitute goods, and the price of complementary goods, remain the same. Following the law of demand, the demand curve is almost always represented as downward-sloping, meaning that as price decreases, consumers will buy more of the good.

Just like the supply curves reflect marginal cost curves, demand curves are determined by marginal utility curves. Consumers will be willing to buy a given quantity of a good, at a given price, if the marginal utility of additional consumption is equal to the opportunity cost2 determined by the price, that is, the marginal utility of alternative consumption choices. The demand schedule is defined as the willingness and ability of a consumer to purchase a given product in a given frame of time.

It is aforementioned, that the demand curve is generally downwardsloping, there may be rare examples of goods that have upward-sloping demand curves. Two different hypothetical types of goods with upwardsloping demand curves are Giffen goods3 (an inferior but staple good4) and Veblen goods5 (goods made more fashionable by a higher price).

By its very nature, conceptualizing a demand curve requires that the purchaser be a perfect competitor – that is, that the purchaser has no influence over the market price. This is true because each point on the demand curve is the answer to the question «If this buyer is faced with this potential price, how much of the product will it purchase?» If a buyer has market power, so its decision of how much to buy influences the

46

market price, then the buyer is not «faced with» any price, and the question is meaningless.

Like with supply curves, economists distinguish between the demand curve of an individual and the market demand curve. The market demand curve is obtained by summing the quantities demanded by all consumers at each potential price. Thus, in the graph of the demand curve, individuals’ demand curves are added horizontally to obtain the market demand curve.

The determinants of demand are:

1.Income.

2.Tastes and preferences.

3.Prices of related goods and services.

4.Consumers’ expectations about future prices and incomes that can be checked.

5.Number of potential consumers.

Notes to the text:

1)marginal cost – маргинальная стоимость, предельные за-

траты.

Syn.: incremental cost, differential cost.

– the increase in total cost of production as a result of producing one more unit of output; since certain overhead costs are fixed, the marginal cost is almost always less than the total per-unit cost of production averaged over all units produced.

2)opportunity cost – альтернативная стоимость.

–a benefit, profit or value of something that must be given up to acquire or achieve something else. Since every resource (land, money, time, etc.) can be put to alternative uses, every action, choice, or decision has an associated opportunity cost.

Opportunity costs are fundamental costs in economics, and are used in computing cost benefit analysis of a project. Such costs, however, are not recorded in the account books but are recognized in decision making by computing the cash outlays and their resulting profit or loss.

3) Giffen goods – товар (благо) Гиффена (товар, спрос на который увеличивается при росте его цены).

–in economics (consumer theory), a Giffen good is that which people consume more of as price rises, violating the law of demand. In normal situations, as the price of such a good rises, the substitution effect

47

causes people to purchase less of it and more of substitute goods. In the Giffen good situation, cheaper close substitutes are not available. Because of the lack of substitutes, the income effect dominates, leading people to buy more of the good, even as its price rises.

4) staple goods – товары первой необходимости.

–staple goods are consumer goods (such as bread, milk, paper, sugar) that are bought often and consumed routinely. Staples offer little differentiation and are usually compete on the basis of price.

5) Veblen goods – товар (благо) Веблена (товар, потребление которого (при прочих равных условиях) увеличивается при повышении цены) То есть эффект замещения от изменения цены перевешивается действием эффекта дохода.

–in economics, Veblen goods re a theoretical group of commodities for which peoples’ preference for buying them «increases» as a direct function of their price, instead of decreasing according to the theory of supply and demand.

It is claimed that some types of high-status goods, such as diamonds or luxury cars, are Veblen goods, in that decreasing their prices

«decreases» people’s preference for buying them because they are no longer perceived as exclusive or high status products.

Task 2. Match each word with its correct definition.

Task 3. Find a noun in each line. Time for doing this task is limited – 4 minutes. Mind the time.

48

Task 4. Answer the following questions:

1.What is a supply schedule?

2.How many basic laws of supply and demand are there in microeconomics?

3.Will firms produce additional output while the cost of producing an extra unit of output is less than the price they would receive?

4.What is equilibrium?

5.Are firms’ expectations about future prices and number of suppliers the determinants of supply?

6.Do economists distinguish between the demand curve of an individual and the market demand curve?

7.What are the determinants of demand?

8.What can the examples of staple goods be?

Language review

Task 1. Put a question tag on the end of these sentences.

Note (примечание):

tag – лингв. «хвост», вторая часть в структуре разделительного вопроса (tag question), превращающая утверждение в собственно вопрос, который можно рассматривать как краткий вопрос общего типа. В кратком вопросе повторяется вспомогательный, модальный или связочный глагол первой части предложения.

Если сказуемое предложения, содержащего заявление (первая часть), выражено глаголами to be (is, are, was, were) или to have (has), то повторяются эти глаголы.

Если глагол в предложении, содержащем заявление, стоит в утвердительной форме, в кратком вопросе глагол стоит в отрицательной форме; если глагол в предложении, содержащем заявление,

49

стоит в отрицательной форме, глагол в кратком вопросе стоит в

утвердительной форме.

Example: The weather is nice today, isn’t it? (Погода прекрасная сегодня, не так ли?) He can’t swim, can he? (Он не умеет плавать, не так ли?).

A supply curve is a graph that illustrates that relationship between the price of a good and the quantity supplied, … .

Firms will produce additional output while the cost of producing an extra unit of output is less than the price they would receive, … .

In the long run potential competitors can enter or exit the industry in response to market conditions, … .

Such costs, however, are not recorded in the account books but are recognized in decision making, …

Economists distinguish between the demand curve of an individual and the market demand curve, … .

Then the buyer is not «faced with» any price, and the question is meaningless, … .

Task 2. Make the sentences, given below interrogative and negative.

1.A supply curve is a graph that illustrates that relationship between the price of a good and the quantity supplied.

2.A supply curve requires the firm to be a perfect competitor.

3.In the long run potential competitors can enter or exit the industry in response to market conditions.

4.Demand curves are determined by marginal utility curves.

5.Following the law of demand, consumers will buy more of the good.

Task 3. Fill in the blanks in the sentences with proper prepositions (choose between the two offered variants for each blank). Define the Tense and the Voice of the underlined predicate in the sentences.

1. In a competitive market, the unit price ... (on / for) a particular good will vary until it settles ... (at / on) a point where the quantity demanded by consumers will equal the quantity supplied ... (with / by) producers.

50