6. Competition.

Economic rivalry or competition is another essential feature of a free enterprise economy. Competition, as econ­omists see it, is essentially price competition. The model of the market economy faces a situation where, in the market for each commodity, there are large numbers of buyers and sellers. Each buyer and seller has an influence on the market demand or market supply. It is the forces of total demand and total supply which determine the market price, and each participant, whether buyer or seller, must take this price as given since it is beyond his or her influence or control. In theory at least, competition is the regulatory mechanism of capitalism. It limits the use of economic power since no single firm or individual is large enough or strong enough to control a market and exploit the other buyers or sellers.

7. Markets and Prices.

Perhaps the most basic feature of the market economy is the use of the price mechanism for allocating resources to various uses. The decisions of producers determine the supply of a commodi­ty; the decisions of buyers determine the price.

Exercises

Ex.2 Give English equivalents to the following word combinations:

Економічна діяльність; система ринкової економіки; свобода вибору; особистий інтерес; головні риси; отримувати прибуток з власності; цінова система; приватна власність; стикатися з ситуацією; учасник; залучати активи; регуляційний механізм; загальний попит та загальна пропозиція; ринкова ціна; обмежує використання економічної потужності.

Ex.3. Find where in the text it is said about the points given below. Put down the number of the paragraph.

1. six essential features the framework of a market capitalist system contains;

2. things the owners are provided with by private property;

3. the meaning of "the freedom of choice";

4. the principle capitalism is based on;

5. competition as the regulatory mechanism of capitalism;

6. the price mechanism;

Ex.4. Find the terms in the text which designate the following:

1. the market system of economic organization

2. the right to own, control and dispose natural and man-made resources

3. freedom to buy and hire economic resources, to organize these resources for production, and to sell products in the markets

4. economic rivalry

5. the motive for economic activity

6. a means of allocating resources to various uses.

Ex.5. Say if the following statements are true or false:

1. The state plays little or no part in economic activity.

2. The model of the market economy faces a situation where, in the market for each commodity, there are few buyers and sellers.

3. The decisions of buyers determine the supply of a commodi­ty; the decisions of producers determine the price.

4. Each buyer and seller has an influence on the market demand or market supply.

5. Freedom of choice means that consumers are free to spend their incomes in any way they wish.

6. The pure market system is common for modern world.

7. Owners of land and capital will employ these assets so as to obtain the high­est possible rewards.

Ex. 6. Find the answers to the questions in the text. Put down the number of the paragraph:

1. What is the role of government in the market economy?

2. What are essential features of the capitalist system?

3. What does private proper­ty provide owners with?

4. What does freedom of choice mean?

5. What situation does the model of the market economy face?

6. What do the decisions of producers determine?

Ex. 7. Answer the questions of the Ex. 6 orally

Ex. 8. Describe the framework of market or capitalist system.

Ex. 9. Explain why self-interest is considered to be the motive for economic activity.

Ex. 10. Prove that the pure capitalist market has never existed.

Ex. 11. Make up a plan covering the main ideas. Discuss the text according to the plan.

Ex. 12. Discussion points.

1. Discuss the advantages of free market system over plannaed economies. Are there any disadvantages? Look through the chart and find out the attitude of different countries to this issue.

2. Find out and discuss how the involvement of the government is exercised into the economic system of our country. Name the ways and the bodies.