Unit 3 some economic laws Word list

Develop – разрабатывать; reasoning means – средства; engage – вовлекать; to be engaged in – заниматься (чем-либо); predict – предсказать; domain – сфера, область; exact – точный; (with) surety – с уверенностью; hypothetical – гипотетический; conclude – делать вывод; approximate – приблизительный; bless – благословлять; valid – действительный, имеющий силу; statement – утверждение; behavior – поведение; matter – вопрос; allocation – размещение; diminish – уменьшать, снижаться; marginal – предельный; utility – полезность; satisfy – удовлетворять; to be related to – касаться чего-либо; available – доступный, имеющийся в наличии; decrease – уменьшаться; increase – увеличиваться; stock – запас, накопления; supply – предложение; demand – спрос; a measure – мера; regard – считать; elastic – эластичный; essential – необходимый; essentials – предметы первой необходимости.

Text study

Economics, like other sciences, has drawn its own set of laws. Economic laws are developed with the help of reasoning or by the aid of observation of human and physical nature. In everyday life, we see man is always busy in satisfying means. In doing so, he acts upon certain principles. These principles which an average man usually follows when he is engaged in economic activity are named economic laws.

Laws of economics are less exact as compared to the laws of natural sciences like Physics, Chemistry, etc. An economist cannot predict with surety as to what will happen in future in the economic domain. He can only say as to what is likely to happen in the near future. Economic laws are essentially hypothetical. They are true under certain given conditions. But we should not conclude that, they are useless or unreal.

Samuelson writes “Despite the approximate character of economic laws, it is blessed with many valid principles”.

Laws of economic are qualitative in nature. They tell the direction of change which is expected rather than the amount of change.

Economic laws do not deal with any particular individual, firm, commodity etc. An economic law is a statement of a scientific truth about human behavior in the matter of the allocation of scarce resources into unlimited ends.

Take for instance, the law of diminishing marginal utility. Complex personal wants are satisfied in different ways by different things. This special characteristic of satisfying a want is known in economics as its “utility”. Economists describe utility as “the relationship between a consumer and a commodity”. Utility varies between different people and nations. Utility varies with time. The utility of a commodity is also related to the quantity available to the consumer. The utility of a commodity consequently decreases as the consumer’s stock increases. The consumer’s desire for a commodity tends to diminish as he buys more unit of that commodity. This tendency is called the Law of Diminishing Marginal Utility.

Utility is of course related to the laws of Supply and Demand. The first thing to understand is that demand is not the same thing as desire, or need, or want. Only when desire is supported by the ability and willingness to pay the price does it become an effective demand and has an influence in the market. Demand in economics may be defined as quantity of the commodity which will be demanded at any given price over some given period of time.

For the great majority of goods and services, experience shows that the quantity demanded will increase as the price falls. This particular characteristic of demand curve, which is a graphical representation. The demand curve shows the relationship between prices and the quantities demanded. The supply schedule and supply curve show the relationship between market prices and the quantities which suppliers are prepared to offer for sale.

The basic law of supply says: “More will be supplied at a higher price than at lower price”. An increase in price usually means that production will become more profitable. In addition, in the long run, an increase in price (and hence profits) would tend to encourage new firms to enter the industry.

The principle of elasticity operates in the area of demand as well as in the area of supply. Elasticity of demand is a measure of the change in the quantity of a good in response to demand. The change in demand results from a change in price. Demand is inelastic when a good is regarded as a basic necessity, but particularly elastic for nonessential commodities.