Exercises

1.Choose the correct answer a, b or c from the list opposite.

1Companies usually have a.......................with senior managers at the top and employees at the bottom.

2McDonald’s has a very big.......................of the fast food market.

3 Some teachers mark students’ work using a .......................from A to E.

4 No one’s work is........................We all make mistakes.

5 A perfect economic system may never

6 A.......................monopoly means an absolute or complete monopoly.

7 Not all twins are........................Some twins are brother and sister, for example.

8 Sometimes a person’s colour or race can be a .......................to getting work.

9 We use curtains to.......................light.

10 Countries have been.......................with each other for thousands of years.

11 The.......................point is where two things are balanced against each other.

12 Honey is a healthier.......................for sugar to make things sweet.

13 Everyone should have ……………to education.

1 A shape	B structure	C building
2A piece	B part	C market share
3 A scale	B point	C grade
4 A good	B better	C perfect
5A is	B live	C exist
6 A pure	B good	C clean
7 A similar	B identical	C same
8 A gate	B barrier	C block
9 A barrier	B close	C block
10 A shopping	B trading	C selling
11 A equilibrium	B middle	C equal
12 A difference	B addition	C substitute
13 A access	B openings	C entrance

2. Now complete each sentence with words. Then listen and check your answers.

■a monopoly ■an oligopoly

■ a monopsony ■ imperfect competition

1 Any market structure apart from perfect competition is called........................

2.......................is when there is only one seller of a good or service.

3.......................is when only a small number of sellers control the market.

4.......................is when there is only one buyer in

3. Now read the text again and decide whether these statements are true or false.

1 Market structure describes how competitive a market is.

2 Perfect competition and pure monopoly are opposites.

3 Four conditions are necessary for perfect competition to exist.

4 In perfect competition, every company makes a slightly different product.

5 Perfect competition makes it easy for new companies to start trading.

6 When there is perfect competition, companies are able to set any price they want.

4. Discuss the following with your partner.

a. Here are some things that affect how a market operates. How important do you think each one is?

-» the size of companies

-»what products and services are like

-» what information consumers and companies have about products

-»ease of entry into the market for companies

-» companies having the resources and technology they need

b. Perfect competition is really only an idea. It almost never happens in the real world. Why do you think this is? Can you think of any market that has perfect competition?

Text 3. 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 arc simply what people arc 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 economies arc 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 in most societies today.