VI. Match the words in the left-hand column with their synonyms:

lucrative increasingly technical advances to imply to purchase

moreandmoreoveraperiodoftime bringing a lot of money infer to buy progress in science, technology

Match the words in the left-hand column with their antonyms:

exceed essential adjust decay frustrated

disarrange happy less than a number or amount unimportant fusion

VII. Insert suitable words into the gaps changing the form of the words if necessary.

to cause, exchange, shortages, a demand schedule, interplay, to equal, to be determined, demand curve, surpluses, to be brought together, purchase, a supply schedule, pressures, equilibrium price, equilibrium point, equilibrium, determinants, costs, to assume, supply curve

In our economic system resources are allocated through the 1)______ of goods and services between producers and consumers. Each good or service commands a price. These prices are 2)______ by the 3)______ between the demand for a product and its supply.

4)______ and its graphic representation, the 5)______, show the amounts of a good or service buyers would 6)______ at different prices.

7)______ and its graphic representation, the 8)______, show the amounts of a good or service sellers would offer for sale at different prices.

When buyers and sellers are 9)______ in the market, an 10)______ is established where the quantity demanded 11)______ the quantity supplied. This is the 12)______ price at which there are no 13)______ and no 14)______. In competitive markets, prices cannot stay above or below the equilibrium point for very long. Competitive 15)______ push prices back down or up to the 16)______.

The 17)______ of demand are consumer tastes and preferences, income levels, the availability and prices of substitutes and complements , and the population size of the market.

Supply is determined by production 18)______. The short-run situation 19)______ that plant size, equipment, and technology do not change; the long-run situation assumes production capacity and technology can change.

A change in demand or supply is reflected by changes along the entire demand or supply schedule. This 20)______ the schedule to shift left or right.

VIII. Give the terms for the following explanations.

1. The price at which the quantity supplied equals the quantity demanded.

1. The price prevailing in a market.

2. A set of arrangements by which buyers and sellers are in contact to exchange goods and services.

3. The situation in which quantity supplied exceeds quantity demanded at a particular price.

4. The quantity of a good that sellers wish to sell at each conceivable price.

5. The situation in which quantity demanded exceeds quantity supplied at a particular price.

6. A market in which price is determined purely by the forces of supply and demand.

7. The quantity of a good that buyers wish to purchase at each conceivable price.

8. A method of selling goods and services by competitive bidding.

9. An agent who acts on behalf of clients in buying and selling financial securities.

IX. Tasks for thought.

1. Which of the following could cause a rise in house prices?

1. A decline in house-building.

2. An increase in lending by building societies.

3. A rise in mortgage interest rates.

4. An increase in the willingness of local authorities to sell council houses to tenants.

2. The distinction between shifts of the demand and supply curves and movements along them is an important one. Place ticks in the appropriate columns of Table 1 to show the effects of changes in the ‘other things equal’ categories detailed in the first column. (Two ticks are required for each item).

Table 1. Movements of and along a curve

Change in ‘other things equal’ category	Shift of demand curve	Movement along demand curve	Shift of supply curve	Movement along supply curve
Change in price of competing good
Introduction of new technique of production
A craze for the good
A change in incomes
A change in price of a material input

1. Suppose cold weather makes it more difficult to catch fish. What happens to the supply curve for fish? What happens to equilibrium price and quantity?

2. Suppose cold weather also reduces the quantity of fish demanded because people do not go shopping. Show what happens to the demand curve for fish?

3. What happens to the equilibrium quantity of fish when cold weather sets in and both these effects occur? Can you say what happens to the equilibrium price of fish?