The market economy

Have you ever walked through a busy street market? People push their way through crowds of others in order to reach the stalls first. The air is full of deafening shouts. Stall owners yell to advertise their goods. Buyers cry out their orders. It's hard to imagine, but behind this noisy confusion is a very logical economic theory: the market economy.

The market economy is sometimes called the free market. A free market is not controlled in any way by a government. It is also free from the influence of custom or tradition. In a free market, the only reason why things are bought and sold is because there is a demand for them. Prices for goods and services are simply what people are prepared to pay. The market economy is not really controlled by anyone. It controls itself.

The street market where we began has many of the characteristics of the free market. Customers arrive at the market with a shopping list of things they need. They also come with an idea of how much they are prepared to pay. Stall owners sell what customers demand, and try to get the highest price they can for it. Supply and demand control what is on the market and how much it sells for. In the wider economy, we are all customers, and the stall owners are like companies.

The role of the company in the free market is to supply what people want. However, companies need an incentive. The incentive is profit. There are two ways for companies to make a profit. The first way is to raise their prices. The second way is to reduce their production costs. And this brings us to two more features of the market economy: competition and technology.

Competition exists in a free market because, theoretically, anyone can be a producer. This means that companies have to compete with each other for a share of the market. Competition is good for consumers because it helps to control prices and quality. If customers aren't happy with a product or service, or if they can't afford it, they will go to a competitor.

Technology exists in a free market because producers need ways to reduce their costs. They cannot buy cheaper raw materials. Instead, they must make better use of time and labour. Technology is the use of tools and machines to do jobs in a better way. This helps companies produce more goods in less time and with less effort. The result: more profit.

People often think that most economics are free markets. However, at the macroeconomic level, a truly free market economy does not exist anywhere in the world. This is because all governments set limits in order to control the economy. Some governments set many limits, other governments set very few, but they all set some. For this reason, a true market economy is only theoretical. Nevertheless, many of the features of the market economy do exist on most societies today.

B Comprehension

Now read the text again and answer these questions in your own words in the space provided below.

1. Who controls a market economy?

2. Who decides what products are for sale in a free market?

3. What do companies want?

4. Why is competition a good thing?

5. Why does technology exist in the market economy?

6. Why are there no true market economies in the world today?

Before you listen

Discuss these questions with your partner.

-Do you think the free market is a good idea?

-Is it good for society? Why/Why not?

C Listening

Now listen and choose the correct answer.

Adam Smith's invisible hand theory:

1. People are naturally selfish/helpful.

2. The free market only demands what is good for society/producers.

3. When people work for their own good, they do good for consumers/society also.

In the real economy:

4. In the free market there is demand for goods which are not expensive/necessary.

5. There is also demand for goods which are good/bad for us.

6. The market/Advertising can create demands that do not normally exist.

Grammar: Present perfect

I/you/we/they HAVE + Past Participle

He/she/it HAS + Past Participle

Use the Present Perfect when the action in the past has a result now.

Where is your key? I don’t know. I have lost it.

Is Ann here? No, she has gone out.

Use the Present Perfect to announce a recent happening.

Ow! I have cut my finger.

The road is closed. There has been an accident.

Use the Present Perfect with just, already, yet, ever, never, recently, lately, in the last few days, so far, since childhood, for ages, today, this month.

I haven’t seen you for ages.

He has already done his homework.

She hasn’t come back yet.

Exercises

You are writing a letter to a friend. In the letter you give news about yourself and other people. Use the words given to make sentences. Use the present perfect.

Dear Chris,

Lots of things have happened since I last wrote to you.

1. I / buy / a new car ..I've bought a new car...

2. my father / start / a new job

3. I/ give up / smoking

4. Charles and Sarah / go / to Brazil

5. Suzanne /have / a baby

Read the situations and write sentences. Choose one of the following: arrive break go up grow improve lose

1. Mike is looking for his key. He can't find it He has lost his key...

2. Margaret can't walk and her leg is in plaster. She

3. Maria's English wasn't very good. Now it is much better

4. Tim didn't have a beard last month. Now he has a beard

5. This morning I was expecting a letter. Now I have it

6. Last week the bus fare was 80 pence. Now it is 90

Read the situations and write sentences with just, already or yet.After lunch you go to see a friend at her house. She says 'Would you like something to eat?' You say: No, thank you. . I..ve just had..lunch,... (have lunch)

1. Joe goes out. Five minutes later, the phone rings and the caller says 'Can I speak to Joe?' You say: I'm afraid (go out)

2. You are eating in a restaurant. The waiter thinks you have finished and starts to take your plate away. You say: Wait a minute! (not/finish)

3. You are going to a restaurant this evening. You phone to reserve a table. Later your friend says 'Shall I phone to reserve a table?' You say: No, it. (do)

4. You know that a friend of yours is looking for a job. Perhaps she has been successful. Ask her. You say: ? (find)

5. Ann went to the bank, but a few minutes ago she returned. Somebody asks 'Is Ann still at the bank?' You say: No, (come back)

Put in been or gone.

1. Jim is on holiday. He's ...gone... to Italy.

2. Hello! I've just to the shops. I've bought lots of things.

3. Alice isn't here at the moment. She's to the shop to get a newspaper.

4. Tom has out. He'll be back in about an hour.

5. 'Are you going to the bank?' 'No, I've already to the bank.'

Unit 7

You are asking somebody questions about things he or she has done. Make questions from the words in brackets.

1. (ever / ride / horse?) ....Have you ever ridden a horse?..

2. (ever / be / California?)

3. (ever / run / marathon?)

4. (ever / speak / famous person?)

5. (always / live / in this town?)

6. (most beautiful place / ever / visit?) What

Complete B's answers. Some sentences are positive and some negative. Use a verb from this list: be be eat happen have meet play read see see try

What is George’s sister like? I have no idea. I…………………….her.

How is Amy these days? I don’t know. I………………her recently.

Are you hungry? Yes. I……………………much today.

Can you play chess? Yes. But I……………………..for ages.

Did you enjoy your holiday? Yes, it’s the best holiday I…………….for a long time.

What is that book like? I don’t know. I…………………………..it.

Is Rome an interesting plase? I’ve no idea. I…………………………there.

Mike was late for work again. He…………………………..late every day this week.

Do you like caviar? I don’t know. I………………….it.

The car broke down again. That’s the second time it…………..this week.

Who/s that woman by the door? I don’t know. I………………….before.

Complete these sentences using today / this year / this term etc.

1. I saw Tom yesterday but ....I haven’t seen him today....

2. I read a newspaper yesterday but I today.

3. Last year the company made a profit but this year

4. Tracy worked hard at school last term but

5. It snowed a lot last winter but

6. Our football team won a lot of games last season but we

Read the situations and write sentences as shown in the examples.

1 Jack is driving a car but he's very nervous and not sure what to do. You ask: ....Have you driven a car before?..

He says: ...No this is the first time I've driven a car.

2 Len is playing tennis. He's not very good and he doesn't know the rules.

You ask: Have

He says: No, this is the first

3 Sue is riding a horse. She doesn't look very confident or comfortable.

You ask:

She says:

4 Maria is in London. She has just arrived and it's very new for her.

You ask:

She says:

Grammar: The Present Perfect- Continuous Tense

I/you/we/they/ HAVE BEEN + Ving

He/she/ it HAS BEEN + Ving

We use the Present Perfect Continuous for an activity that has recently stopped or repeated over a period of time.

Paul is very tired. He has been working very hard.

Every time they meet in the same café. They have been going there for years.

Write a question for each situation.

1. John looks sun burnt. You ask: (you / sit in the sun?) ...Have you been sitting in the sun?..

2. You have just arrived to meet a friend who is waiting for you. You ask: (you / wait / long?)

3. You meet a friend in the street. His face and hands are very dirty. You ask: (what / you /do?)

4. A friend of yours is now living in Baker Street. You want to know 'How long... ?' You ask: (how long / you / live / in Baker Street?)

5. A friend tells you about his job - he sells computers. You want to know 'How long...?' You ask: (how long / you / sell / computers?)

Read the situations and complete the sentences.

1. The rain started two hours ago. It's still raining now. It ...has been raining... for two hours.

2. We started waiting for the bus 20 minutes ago. We're still waiting now.

We for 20 minutes.

3 I started Spanish classes in December. I'm still learning Spanish now.

I since December.

4. Ann began looking for a job six months ago. She's still looking now. for six months.

5. Mary started working in London on 18 January. She's still working there now. since 18 January.

6. Years ago you started writing to a penfriend. You still write to each other regularly now. We for years.

Put the verb into the present continuous (I am -ing etc.) or present perfect continuous (I have been -ing etc.).

1. Maria ...has been learning... (learn) English for two years.

2. Hello, Tom. I (look) for you all morning. Where have you been?

3. Why (you/look) at me like that? Stop it!

4. We always go to Ireland for our holidays. We (go)

there for years.

5 I…………..(think) about what you said and I've decided to take

your advice.

6. 'Is Ann on holiday this week?' 'No, she (work).'

7. Sarah is very tired. She (work) very hard recently.

Unit 8

Before you read

Discuss the following with your partner.

-Can you actually think of any examples of countries with a completely free market or a totally controlled one?

-Give any examples you can think of or say why you can't come up with any true examples.

A Vocabulary

Complete each sentence with a word or phrase from the box.

Agriculture ban free enterprise

Manufacturers monopoly private sector

Profit motivation public transport state sector

Telecommunications efficiently trade

1. …… is when businesses are able to trade without control from the government.

2. ………………. industries belong to and are run by the government.

3. ………………. industries belong to and are run by independent businesses.

4. Buses, trains and planes are example of ……………. .

5. …………. is another word for farming.

6. ……………. produce new goods from raw materials.

7. When a business works ……… , it runs successfully without wasting resources.

8. Telephone and internet systems are part of the ………. industry.

9. ………… is what drives businesses in the market economy.

10. When the governments puts a …………. on a commodity, people are not allowed to buy or own it.

11. If only one company controls part of the economy, they have a ……….. .

12. When companies …………….. , they do business with each other.

Reading