Комплексна контрольна робота Англійська мова, ііі курс, 5 семестр

Topic: Demand. Supply. Price.

Text A. Demand

Text B. Supply and market price

Text C. Why prices are important in a market economy

Grammar. The Sequence of Tenses

I. Before reading the text answer the following questions.

1. What gives buyers signals to buy or not to buy goods and services?

2. What do you think causes prices to change in a market economy?

3. How can you explain the term “market price”?

II. Read and memorize the following words and word-combinations:

to bestow – надавати, дарувати, давати

ceteris paribus (Lat.) (other things being equal) – за інших рівних умов

complement – супутній товар

conspicuous – ефектний, разючий

demand (n) –попит, потреба, вимога

demand (v) – вимагати, потребувати, робити запит

demand curve – крива попиту

demand schedule – графік попиту

determinant – визначник, вирішальний фактор

Giffen good – товар Гіффена

the good in question – товар, про який йде мова

inferior goods – неповноцінні товари (товари, попит на які при зрості доходів споживачів падає)

normal goods – нормальні товари(товари, попит на які збільшується із зростом доходів споживача)

opportunity cost – альтернативна вартість

to plot a graph – креслити графік

III. Text a demand

One of the most important building blocks of economic analysis is the concept of demand. Demand - the ability and willingness to buy specific quantities of a good at alternative prices in a given time period, ceteris paribus (other things being equal). A demand exists only if someone is willing and able to pay for the good - that is, exchange money for a good or service in the marketplace. For example, a consumer may be willing to purchase 2 lb of potatoes if the price is $ 0.75 per lb. However, the same consumer may be willing to purchase only 1 lb if the price is $1.00 per lb. These changes we can reflect on the demand schedule. A demand schedule can be represented on a graph as a line or curve by plotting the quantity demanded at each price. A demand curve is a graphical illustration of a demand schedule. Each point on the curve refers to a specific quantity that will be demanded at a given price. A common feature of demand curves is their downward slope. As the price of a good falls, people tend to demand more of it. This inverse relationship between price and quantity is so common we refer to as the law of demand. Thus, the law of demand can be stated formally as follows: in any market, other things being equal, the quantity of a good or service that buyers demand tends to rise as its price falls and to fall as its price rises.

As mentioned above, the general form of a demand curve is that it is downward sloping. But there may be rare examples of goods that have upward sloping demand curves. A good which demand curve has an upward slope is known as a Giffen good. The existence of Giffen goods can be explained by conspicuous consumption; that is the desire to own/buy a good due to the social status its ownership implies and bestowes.

It is necessary to say about the movements along the demand curve and shifts in the demand curve.

Economists speak of a movement along demand curve as a change in quantity demanded. Such a movement represents buyers' reaction to a change in the price of the good in question, other things being equal. The degree to which price changes affect demand will depend upon the elasticity of demand for a particular item.

If total revenue increased following a price decrease, demand would be elastic. If the price decrease led to a decrease in total revenue, the demand for the item would be described as inelastic. The demand for some goods and services will be inelastic for one or more of the following reasons:

- They are necessities.

- It is difficult to find substitutes. - They are relatively inexpensive. - It is difficult to delay a purchase.

Economists speak of a shift in the demand curve as a change in demand. Such a shift represents a change in buyers' plans caused by some factors other than the price of the good in question. The determinants of demand include:

- Tastes (desire for this or that good).Sometimes these changes happen rapidly, as is the case in such areas as popular music, clothing styles and fast foods. The demand curves for these goods shift often.

- Income (of the consumer).As real income rises, people buy more of some goods (which economists call normal goods) and less of what are called inferior goods. Urban mass transit and railroad transportation are classic examples of inferior goods. That is why the usage of both these modes of travel declined so dramatically as postwar incomes were rising and more people could afford automobiles.

- Other goods (their availability and price).Another influence on demand is the price of substitutes.

For example, when the price of Toyota Tercels rises, other things being equal, demand for Tercels falls and demand for Nissan Sentras, a substitute, rises. Also important is the price of complements, or goods that are used together. When the price of gasoline rises, the demand for cars falls.

- Expectations (for income, price, tastes). If people expect the price of a good to rise relative to the prices of the goods or expect the opportunity cost of acquiring the good to increase in some other way, they will step up their rate of purchase before the change takes place.