efe

Monopsony. A monopsony consists of a market with a single buyer. When there are only a few buyers, the market is defined as an oligopsony. In general, when buyers have some influence over the price of their inputs they are said to have monopsony power.

Natural monopoly. A natural monopoly exists in a particular market if a single firm can serve that market at lower cost than any combination of two or more firms. Natural monopoly arises out of the properties of productive technology, often in association with market demand, and not from the activities of governments or rivals. Generally speaking, natural monopolies are characterized by steeply declining long run average and marginal-cost curves such that there is room for only one firm to fully exploit available economies of scale and supply the market.

Oligopoly. An oligopoly is a market characterized by a small number of se l- lers who realize they are independent in their pricing and output polices. The number of sellers is small enough to give each seller some market power.

An oligopoly is distinguished from perfect competition because each seller in an oligopoly has to take into account their independence; from monopolistic competition because firms have some control over price; and from monopoly because a monopolist has no rivals, in general, the analysis of oligopoly is concerned with the effects of mutual interdependence among firms in pricing and output decisions.

There are several types of oligopoly. When all sellers are of (roughly) equal size, the oligopoly is said to be symmetric. When this is not the case, the oligopoly is asymmetric. One typical asy mmetric oligopoly is the dominant firm. An oligopoly industry may produce goods which are homogeneous (undifferentiated) or may produce goods which are heterogeneous (differentiated).

The analysis of oligopoly behavior normally assumes a symmetric oligop o- ly, often a duopoly. Whether the oligopoly is differentiated or undifferentiated, the critical problem is to determine the way in which the firms act in the face of their realized independence.

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TAS KS

I. Give the English equivalents to:

Естественная монополия, средние издержки, предельные издержки (краткосрочного/долгосрочного периода), монопсония, олигопсония, производственная технология, экономия от масштаба, совершенная конкуренция, однородные/неоднородные товары, научно-технический пр огресс, дуополия, барьеры входа.

II. Match the terms with their definitions:

III.Answer the following questions:

1.What is a monopoly?

2.What is the difference between a monopoly and perfect competition?

3.Who sets prices in a monopolistic market?

4.What are the results of monopolistic behavior in a market?

5.Under what conditions does a monopoly continue to exist?

6.What are the main types of monopolies?

7.What are the distinctive features of a natural monopoly?

IV. Do the following tasks:

1.Describe a monopoly from the standpoint of conventional economic analysis.

2.Compare a monopolistic market to a normal competitive environment.

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3.List all the arguments against monopolies and counter arguments in favor of monopolies.

4.Describe the conditions under which monopolies continue to exist.

5.List all kinds of monopolies and describe in what way they differ from each other.

V. Render the text in English:

М онополия характеризуется наличием одного-единственного продавца конкретного товара на рынке. Продавец обладает монопольной властью, если он может повышать цену на свою продукцию путем ограничения своего собственного объема выпуска. М онополистической конкуренции свойственны черты как монополии, так и совершенной конкуренции. М онополистическая конкуренция – это совершенная конкуренция плюс дифференциация продукции. В условиях монополистической конкуренции, как и в условиях совершенной конкуренции, не существует барьеров для входа на рынок новых фирм. Открыть новый ресторан, бензоколонку или аптеку в большинстве крупных городов не составляет труда. Но поскольку барьеры входа отсутствуют, фирмы в монополистически конкурентных отраслях не рассчитывают на получение значительной прибыли в долгосрочном периоде.

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MONEY

People practising specialized production must exchange their outputs of goods and services with one another. Until a full money system has been developed, such an exchange is usually carried on by barter. T his is the exchange of goods directly for other goods and services. Barter, however, has certain disadvantages. The chief of these are the need for a coincidence of wants, the difficulty of equating values, and the indivisibility of large items.

M oney is a solution to the problems of barter, because each commodity or service can be exchanged for money, which can then be used by the new owner to purchase a balanced supply of utilities. M oney is any medium of exchange which is generally acceptable.

Types of money.

a)Token coins. These are coins made from metals whose real value is less than the face value of the coin.

b)Paper money. Printed money is more convenient than coins, being lighter to carry and easier to handle in large quantities. One more advantage of paper money is ease in guarding against forgery. The denominations of notes can be arranged to suit price

levels in common use.

c) Bank deposits. Amounts placed to the credit of customers’ accounts at banks are the same as money. These deposits can then be transferred from one person to another by means of cheques. So cheques are not money, but only orders to pay money.

Any means of payment which people are forced by law to accept in settlement of a debt is legal tender. M oney need not be legal tender and in fact bank deposits, which are money, are not legal tender. If legal tender is not generally accept a- ble, then it will cease to be money. In Germany at the end of the Second World War, marks, which were legal tender, were often not accepted in payment whereas cigarettes often were.

M oney functions as a medium of exchange, a measure of value and store of

value.

a) Medium of exchange. This is the chief function of money. It overcomes the need for a coincidence of wants, since everyone “wants” money, which represents a claim against any goods or services which will yield satisfaction.

b) Measure of value. The value of goods and services is measured in terms of money. It is then known as price.

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c) Store of value. Wealth can be kept in the form of money. The use of money as a store of value only applies when individuals are storing it; a whole nation could not do so.

The value of money, like the value of anything else, is whatever it can be exchanged for. It is, in effect, its purchasing power. A rise in prices means that the value of money has fallen; a fall in prices, that it has risen. The value of money changes inversely with changes in the price level. It is highly desirable that the value of money should remain stable over the years, otherwise its functions cannot be fulfilledproperly.

TAS KS

I. Give the English equivalents to:

Совпадение потребностей, законное платежное средство, средство обращения, мера стоимости, средство сбережения, материальные ценности, рост и снижение цены.

III. Fill the gaps with the following words: coins, money, barter, legal tender, notes, value:

1.Until a full money system has been developed, trade is usually carried on by … .

2.M oney is only a claim against the real goods that have … .

3.… is of no use unless wealth is created.

4.Bank of England notes are … to any amount in the UK.

5.Where devaluation of a currency is possible, foreigners are unwilling to accept the

… and … of the country in question.

IV. Answer the following questions:

1.What are the disadvantages of barter?

2.What are the main functions of money?

3.What is meant by the value of money?

4.Why are these functions less effectively performed if money changes in value?

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5.What is the correlation between the value of money and prices?

6.What is meant by legal tender?

V. Are the following statements true or false? Correct the false ones:

1.Barter is the exchange of goods for money.

2.Bank deposits and cheques are types of money.

3.Price is the value of goods and services measured in terms of money.

4.Paper money consists of notes issued by commercial banks.

5.One of the advantages of paper money is ease in handling in large quantities.

6.Any type of money can be classified as legal tender.

7.A rise in prices means that the value of money has also risen.

VI. Render the text in English:

C развитием рыночных отношений параллельно с товаром поя вляются деньги. Деньги – это особый товар, всеобщий эквивалент. Они могут обмениваться на все другие товары и удовлетворять любые потребности их владельцев. Сущность денег проявляется в их функциях.

Средство обращения. Деньги используются при покупке и продаже товаров и услуг. Как средство обмена деньги позволяют обществу избежать неудобств бартерного обмена.

Мера стоимости. Общество считает целесообразным использовать денежную единицу в качестве масштаба для соизмерения относительных стоимостей разнородных благ и ресурсов. М ера стоимости – это выражение стоимости товаров в деньгах, которые позволяют идеально оценивать товары до их появления на рынке.

Средство сбережения. Поскольку деньги представляют собой наиболее ликвидное (то есть такое, которое проще всего истр атить) имущество, они являются очень удобной формой хранения богатства. Владение деньгами, за редким исключением, не приносит денежного дохода, который можно получить при сохранении богатства, например, в форме недвижимого имущества или ценных бумаг. Однако деньги имеют то преимущество, что они могут быть безотлагательно использованы для выполнения любого финансового обязательства.

VII. Gi ve a summary of the text.

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PRICING

Price is one element of the marketing mix. A business must decide how to price its product. In makingthis decision it needs to consider:

what are the prices charged by competitors;

how prices can be used to increase sales of the product; whether the price will cover costs of p roduction.

Competition based pricing. One factor which is likely to influence is the price of similar competitive products. To sell a bottle of Tresor, produced by

L’Oreal, at ₤50 a bottle when Chanel № 5 is selling at ₤30 a bottle may lose L’Oreal sales. On the other hand, to sell it at ₤10 might not increase sales because consumers might think that Tresor was a lower quality perfume. Any business needs to think carefully about the price charged by rivals. When a perfume house sets a price which is roughly the same as that set by other perfume houses, it has decided to avoid price competition. Instead, it could attempt to get customers through advertising attractive packaging or other marketing means. On the other hand, some businesses deliberat e- ly attempt to undercut their competitors’ prices. In 1993 and 1994, for instance, The Times newspapers deliberately cut its price from 45p to 30p and then to 20p a copy to raise sales.

Market orientated pricing. Whilst thinking about prices charged by competitors, the world’s perfume manufacturers also use a number of other pricing strategies to raise sales and profits. These strategies are called market oriented pricing strategies because they are based on analyzing the market and its characteristics.

Discounts, special offers and sales. To encourage consumers to buy, the perfume houses often run special offers. The price of a bottle of perfume might be lower if another product is bought at the same time. Discounts might be offered at a particular time of the year. Top perfumes are rarely reduced in a sale because this would affect their high class image. However, many other products, like clothes, are sold at a lower price in sales.

Price discrimination. The perfume houses sell perfumes at different prices in different areas of the world. Selling the same product at different prices to different segments of the market is known as price discrimination. The perfume houses attempt to charge what the market will “bear” in order to earn the highest profit possible in each market. If, for example, consumers in the USA were prepared to pay a higher price for a bottle of Chanel №5 than consumers in the M iddle East, then Chanel might charge a higher price in the USA.

Penetration pricing. A new competitor to the perfume market might be tempted to use penetration pricing. This is charging a lower price for a product at the

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start in order to gain market share. Once a product is established in the market, the business would raise its price. This is suitable for products where price is important in influencing spending decisions and where there is a long term market for the product. The problem with using this strategy with perfumes is that price can be linked to quality in the minds of consumers. Consumers may be happy to buy cheap sample bottles, but a low priced bottle of perfume could be seen as low quality.

Creaming. Creaming (or skimming) is the opposite of penetration pricing. It is setting a high price for a product initially and lowing it later on. It is used, for instance, with hi-tech products. When video machines first came out, they cost thousand of pounds. They were bought by companies and enthusiasts who were prepared to pay a high price for a product. However, to create a mass market for the video machines, the manufacturer had to lower the price. A gain, a perfume house is unlikely to want to lower prices when a product reaches the maturity stage of its life cycle because price is often linked to image of quality with perfumes.

Cost based pricing. Perfume manufacturers are in business to make a profit. Charging a price similar to competitors is one way to set prices but might lead to losses. Another way would be to base price on costs of product ion. A retailer like Superdrug might use cost plus pricing. It could calculate the cost of selling a perfume, add a make-up or profit margin for its profit and this would then be the price of the bottle. The cost is the average cost and is made up of:

~ the variable cost – mainly the cost of buying the bottle from the distribu-

tor;

~ the fixed cost – such as wages of staff, rent, heating and lighting.

When the price covers both the average fixed and variable costs of the product, the business is said to be full-cost pricing. Sometimes, another competing retailer might run a special offer on a product line. Superdrug might respond by cutting its prices too, below the full-cost price. So long as the new price more than covers the variable cost, it will at least make some contribution towards paying the fixed costs of the business. This contribution might be far more than if Superdrug didn’t cut its price and sales of the product fell dramatically. In 1993, Superdrug was, in fact, in dispute with the major perfume manufacturers. They refused to sell to Superdrug unless Superdrug charged the high prices found in retailers like Harrods. The manufacturers didn’t want perfume to be sold on price. Superdrug said that its prices were based on its costs. If it had lower costs than Harrods, why should it not be allowed to sell at a lower price? The manufacturers won and have forced Superdrug to sell at higher prices than it would like to. This shows that there are many different ways to fix a price for a product.

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TAS KS

I.Answer the following questions:

1.What is meant by competitive pricing?

2.Why do shops have sales?

3.Why might penetration pricing be a good price strategy to use when launching a new brand of yogurts?

4.M obile phone networks have used price creaming strategies when setting prices. Explain what this means.

5.What is meant by cost based pricing?

II.Match the terms with their definitions:

III. Give synonyms to the words and expressions from the text:

Effect, keep away from, method, pleasant -looking, example/case, planning of an action, special features, region, part, obtain/get, at the beginning, let.

IV. Render the text in English:

Установить цену нового товара трудно, так как у менеджеров мало данных для оценки потребительского спроса. Чем более новаторский характер имеет товар, тем сложнее оценить реакцию потребителей до появления товара на рынке. При установлении цен на новые товары используют два вида страте-

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гий: «снятие сливок» и «проникновение на рынок».

При стратегии «снятия сливок» устанавливают высокую цену, предусматривая ее возможное снижение по мере появления на р ынке конкурентов. Такая стратегия наиболее эффективна, если спрос на товар неэластичен, а компания пользуется патентной з ащитой.

В рамках стратегии «проникновения на рынок» компания устанавлив а- ет низкую цену на новый товар, чтобы предотвратить приход на рынок конкурирующих товаров. Это имеет смысл, если товар не защищен патентом, а спрос на него эластичен. Такой стратегии придерживалась компания «Bausch&Lomb», выйдя на рынок с мягкими контактными линзами в начале 70-х годов. Она проводила агрессивную ценову ю политику, устанавливая в отрасли цены на 50% ниже обычных. Когда ее главный конкурент компания «Cooper-Vision» также понизила цены на свои линзы, «Bausch&Lomb» в ответ еще больше снизила цены – до 10-15 долларов.

V. Give a summary of the text.

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