1. Understanding Expressions: give the best explanation for each of these phrases used in the text.

Markets overstocked with products; monetary value; manufacturing expense; financial gain; “demand curves” and “supply curves”; to charge higher prices; to cut production; to act rationally; to offset its rising unit costs; to rely on trial and error.

2. According to the text, mark these statements t (true) or f (false).

1. The law of supply states that the quantity of a good supplied falls as the market price rises, while the law of demand says that the quantity of a good demanded falls as the price rises.

2. It is the main function of a market to increase the production that balances the supplies of goods and services and demands for them.

3. An equilibrium price (also known as a “market-clearing” price) is set by the government.

4. Producers would always like to charge higher prices.

5. If ordinary people were aware of the principle of equilibrium in economy they would do without economists.

6. In real economic systems markets do not behave in an ideal way.

3. Say what the following economic terms mean.

The laws of supply and demand, “equilibrium” price, assets, cost, price, balance, a price mechanism, a numerical monetary value to a good, goods available for sale, a perfect economy, inflation, demand.

4. Choose the variants that best explain the ideas of the sentences below.

1. Economists do not really have a “law” of supply, though they talk and write as though they do.

1. Economists talk and write a lot about the law of supply because it is primary in economics.

2. The law of supply and the law of demand are the same things looked at from different view points.

3. Some economists are not very professional to explain the law of demand, so they talk and write about the law of supply.

2. In a perfect economy, any market should be able to move to the equilibrium position instantly without travelling along the curve.”

1. Ideally, any market should immediately find a balance between supply and demand.

2. In a perfect market economy a market should ignore the curve.

3. If a market is not able to travel along the curve, it is not a market.

5. Comment on the following sentence from the point of view of the laws of supply and demand.

If all Belarusian companies producing TV-sets, for example, raised the prices on their product all of a sudden, it certainly means that the Belarusian market would be overstocked with domestic TV-sets of “Vityas” and “Horizont”.

6. Practise reading §§ 1 and 2. Translate them into Russian. Give a short summary of the passage.

7. Complete the following sentences.

1. The law of supply states that…, while the law of demand says that …

2. Price in economics and business is …, whereas cost concerns …

3. An equilibrium price (also known as a “market-clearing” price) is …

4. Markets in which prices can move freely are …

5. In real economic systems markets …

C. How the text is organised

1. Match the following market changes with their consequences according to the text.

the market price rises	consumers will buy fewer units
producers insist on a higher price	suppliers will produce less and some demand will go unsatisfied
consumers successfully insist on paying less	consumers will buy fewer units than producers have available for sale
the market for a good is already in equilibrium and producers raise prices	quantity supplied falls
the market price falls	the quantity of a good supplied rises