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

1. When the product is launched, a carefully researched product stands less chance of failing.

2. Surveys cannot be useful for market research purposes if the questions asked are appropriate.

3. Research involving asking questions of people or organizations is called a questionnaire.

4. Product oriented business develops products which have been researched and designed to meet the needs of consumers.

5. In equilibrium the marginal rate of substitution between goods is equal to their ratio of prices.

6. The cross elasticity of demand measures the proportional change in the quantity demanded of one good to a proportional price of another.

7. The foundation of exchange is creating or adding value for the buyer.

8. To launch a new product is never very costly.

V. Translate the following terms into English:

1. предельная полезность

2. функции маркетинга

3. проводить опрос

4. бороться за покупателей

5. вопросник

6. конкурентные предложения

7. почтовый опрос

8. делать выбор

Part III. Resource Tests alternative market structures

I. Read the text. Some parts of the text have been taken out. These extracts are listed below. Complete each gap with the appropriate extract. One sentence does not belong in any of the gaps.

a) The collective conduct of all the firms in the industry will affect the whole industry’s performance.

b) Some industries tend more to the competitive extreme, and thus their performance corresponds to some extend to perfect competition.

c) The price they face is that determined by the interaction of demand and supply in the whole market.

d) The market structure under which a firm operates will determine its behaviour.

e) Each firm is so small relative to the whole industry that it has no power to influence price.

It is traditional to divide industries into categories according to the degree of competition that exists between the firms within the industry. There are four such categories.

At one extreme is perfect competition, where there are very many firms competing. ___ (1) It is a price taker. At the other extreme is monopoly, where there is just one firm in the industry, and hence no competition from within the industry. In the middle comes monopolistic competition, where there are quite a lot of firms competing and where there is freedom for new firms to enter the industry, and oligopoly, where there are only a few firms and where entry for new firms is restricted.

___ (2) Firms under perfect competition will behave quite differently from firms that are monopolists, which will behave differently again from firms under oligopoly and monopolistic competition.

This behaviour (or “conduct”) will in turn affect the firm’s performance: its prices, profits, efficiency, etc. In many cases it will also affect other firms’ performance: their prices, profits, efficiency, etc. ___ (3)

Economists thus see a causal chain running from market structure to the performance of that industry.

Structure  Conduct  Performance

First, we shall look at the two extreme market structures: perfect competition and monopoly. Then we shall turn to look at the two intermediate cases of monopolistic competition and oligopoly.

These two intermediate cases are sometimes referred to collectively as imperfect competition. The vast majority of firms in the real world operate under imperfect competition. It is still worth studying the two extreme cases, however, because they provide the framework within which to understand the real world.

___ (4) Other industries tend more to the other extreme: for example, when there is one dominant firm and a few much smaller firms. In such cases, their performance corresponds more to monopoly.