1. Guess the meanings of these words. Which of them can be used as special economic terms?
Determination, price, quantity, consumers, to increase, commodity falls, profitable, to exchange, profit, application, measures, marginal cost, shortage, demand, supply curve.
2. Answer these questions
а) What does the supply and demand model describe?
b) What is the theory of supply and demand?
с) What does the law of demand state?
d) What factors can change demand?
е) What is supply?
3. Give the antonyms to the following words
Profit, increase, high, income, input, available, expensive, employed, include.
4. Read and translate the text
Supply and demand
The supply and demand model describes how prices vary as a result of a balance between product availability and demand. The graph depicts an increase (that is, right-shift) in demand from D1 to D2 along with the consequent increase in price and quantity required to reach a new equilibrium point on the supply curve (S).
Prices and quantities have been described as the most directly observable attributes of goods produced and exchanged in a market economy. The theory of supply and demand is an organizing principle for explaining how prices coordinate the amounts produced and consumed. In microeconomics, it applies to price and output determination for a market with perfect competition, which includes the condition of no buyers or sellers large enough to have price-setting power.
For a given market of a commodity, demand is the relation of the quantity that all buyers would be prepared to purchase at each unit price of the good. Demand is often represented by a table or a graph showing price and quantity demanded (as in the figure). Demand theory describes individual consumers as rationally choosing the most preferred quantity of each good, given income, prices, tastes, etc. A term for this is 'constrained utility maximization' (with income and wealth as the constraints on demand). Here, utility refers to the hypothesized relation of each individual consumer for ranking different commodity bundles as more or less preferred.
The law of demand states that, in general, price and quantity demanded in a given market are inversely related. That is, the higher the price of a product, the less of it people would be prepared to buy of it (other things unchanged). As the price of a commodity falls, consumers move toward it from relatively more expensive goods (the substitution effect). In addition, purchasing power from the price decline increases ability to buy (the income effect). Other factors can change demand; for example an increase in income will shift the demand curve for a normal good outward relative to the origin, as in the figure.
Supply is the relation between the price of a good and the quantity available for sale at that price. It may be represented as a table or graph relating price and quantity supplied. Producers, for example business firms, are hypothesized to be profit-maximizers, meaning that they attempt to produce and supply the amount of goods that will bring them the highest profit. Supply is typically represented as a directly-proportional relation between price and quantity supplied (other things unchanged). That is, the higher the price at which the good can be sold, the more of it producers will supply, as in the figure. The higher price makes it profitable to increase production. Just as on the demand side, the position of the supply can shift, say from a change in the price of a productive input or a technical improvement.
Market equilibrium occurs where quantity supplied equals quantity demanded, the intersection of the supply and demand curves in the figure above. At a price below equilibrium, there is a shortage of quantity supplied compared to quantity demanded. This is posited to bid the price up. At a price above equilibrium, there is a surplus of quantity supplied compared to quantity demanded. This pushes the price down. The model of supply and demand predicts that for given supply and demand curves, price and quantity will stabilize at the price that makes quantity supplied equal to quantity demanded. Similarly, demand-and-supply theory predicts a new price-quantity combination from a shift in demand (as to the figure), or in supply.
For a given quantity of a consumer good, the point on the demand curve indicates the value, or marginal utility, to consumers for that unit. It measures what the consumer would be prepared to pay for that unit. The corresponding point on the supply curve measures marginal cost, the increase in total cost to the supplier for the corresponding unit of the good. The price in equilibrium is determined by supply and demand. In a perfectly competitive market, supply and demand equate marginal cost and marginal utility at equilibrium.
Other applications of demand and supply include the distribution of income among the factors of production, including labour and capital, through factor markets. In a competitive labour market for example the quantity of labour employed and the price of labour (the wage rate) depends on the demand for labour (from employers for production) and supply of labour (from potential workers).
5. Match the words and their definitions
| 1. producer | a) the idea that the price of goods and services depends on how much of something is being sold and how many people want to buy it |
| 2. surplus | b) the usefulness of something |
| 3. supply and demand | c) more than is needed |
| 4. labour | d) a company, country or person that makes goods |
| 5. utility | e) practical work, especially that which involves physical effort |
6. Translate the following words and definitions into English
1. рыночная экономика 6. рыночное равновесие
2. предельная полезность 7. факторы производства
3. рынок труда 8. эффект замещения
4. предельная стоимость 9. закон спроса
5. рынок с совершенной 10. распределение доходов
конкуренцией
7. Translate the following words and definitions into Russian
1. demand-and-supply theory 6. profit-maximizers
2. demand for labour 7. purchasing power
3. income effect 8. perfect competition
4. product availability 9. law of demand
5. normal good 10. supply curve
8. Translate the following sentences using:
such as – такой (ая, – ое, – ие) как…
as… as – такой (же)… как
as… as possible – как можно…
not so… as – не такой… как
as to – что касается…
the same as – такой же как…
1. When prices are not so high as the equilibrium price, there is excess demand (shortage) raising the price.
2. There are some factors influencing demand for a good, such as the prices of other goods, consumer incomes and some others.
3. As to supply, some factors are assumed as constant. Among them are technology, the input price, as well as degree of government regulation.
4. An improvement in technology is as important for increasing the supplied quantity of a good as a reduction in input prices.
9. Choose the right variant of answer
1. ……… describes individual consumers as rationally choosing the most preferred quantity of each good, given income, prices, tastes, etc.
a) supply theory b) market equilibrium c) demand theory
2. The point on the demand curve indicates ………. to consumers for a given customer good.
a) marginal utility b) supply c) perfect competition
3. The quantity of labour employed and the price of labour (the wage rate) depends on the ………..
a) purchasing power b) demand for labour c) income effect
4. The …………. describes how prices vary as a result of a balance between product availability and demand.
a) normal good b) demand for labour c) supply and demand model
5. Producers, for example business firms, are hypothesized to be ………….
a) market b) profit-maximizers c) consumers
10. Complete the following sentences using comparative constructions with the words than or as
1. The market is in equilibrium when the demanded quantity is as large…
2. Prices rise when they are not so high…
3. Prices rise when they are lower…
4. We may have excess supply if prices are higher…
5. The demand for inferior goods at high incomes will not be as high…
11. Fill in the gaps using the following adjectives and adverbs in a comparative form
high, important (2), many, large, low, effectively, much, great, clear, reliable, strong (2), quickly
1. Command economy relies… on planning than on prices.
2. Knowledge of foreign languages is of… importance now than it was some 40 years ago.
3. Land quality is… for agriculture than for other industries.
6. If we want to have a… picture of economic life in the country, we must have… information.
7. In the 18th century the… part of national income in… European countries came from import and export tariffs. These days they play a… role.
8. Governments can influence for whom goods are produced… in economies with… levels of government regulation.
9. If other things are equal, this firm will do the work… than the others.
12. Translate the sentences into Russian paying attention to the using of the words some and same
1. At some price, which we call the «equilibrium price», the demanded quantity of a good equals the supplied quantity.
2. All markets have the same economic function: they form prices equalling the quantities of goods that people wish to buy or to sell.
3. A less developed country is the same as a country of the Third World.
4. An association is an organization formed by the people having the same interests and held together by a system of management.
5. For the next twenty years the supply of energy will be limited in some sectors of the US economy.
6. A consumer group is a small group of people living in the same place who study the prices and the quality of consumer goods sold in shops, and make the information known to the public.
7. An improvement in technology is something that makes it possible for firms to produce more goods with the same quantity of inputs as before.
13. Translate the sentences into Russian paying attention to different meanings of the word as and word combinations using as
1. If the rise in prices is very large and quick, the situation is known as hyperinflation.
2. As to price ceilings, without government regulation and organization they may lead to «black market» as well as other social and economic problems.
3. Complement goods are those goods which you cannot use one without the other, such as cars and petrol. As the price for petrol rises, the demand for cars reduces.
4. Only when demand equals supply, people can buy or sell as much as they want.
5. Harvest failures (неурожаи) are the most important reason for changes in agricultural product supply, but there are other reasons as well.
6. As the supply increases with an improvement in technology, firms want to produce more at the same price level as before.
7. Every firm wants to sell as many goods as possible.
14. Answer the following questions
1. What does the supply and demand model describe?
2. What do factors of production include?
3. When does market equilibrium occur?
4. What does demand theory describe?
5. What are profit-maximizers?
15. Presentation of business letters
The appearance of a letter is very important. It should be well-spaced and well-balanced. Every well-constructed letter is made up of 6 parts:
1) Heading (writer’s address, date of the letter);
2) Inside address (name and address of the person or company receiving the letter);
3) Salutation (Dear Sir:);
4) Body of the letter (reference, information, purpose, conclusion);
5) Complimentary close (saying good-bye);
6) Signature, sometimes there is the seventh part – the postscript.
16. Identify the 6 parts of a business letter
1. HEADING
2. INSIDE ADDRESS
3. SALUTATION
4. BODY
5. CLOSE
6. SIGNATURE
1. Dear Mr Post,
2. November 12, 2000
3. Yours faithfuly,
4. Mr Martin X.Post,
45 Broadway,
New York,N.Y.
5. Peter Pavlov.
6. Thank you for sending me your prospects and a note of your terms. These are satisfactory, so will you please reserve for us the rooms mentioned in your letter.
17. Do the same as in the previous exercise
| 1.Yours faithfully | a.HEADING |
| 1.Yours faithfully | b.INSIDE ADDRESS |
| 3.R.Smith Marketing Manager | c.GREETING |
| 4.April 5, 2000 | d.BODY OF THE LETTER |
| 5.The Executive Director Brown&Smith Ltd., 304 Sherman Ave, Madison,Wisconsin | e.CLOSING |
| 6.We are interested in buying your new product and would be pleased to receive a copy of your latest catalogue and the price list. | f.SIGNATURE |
18. Write a letter informing your correspondent of your arrival and asking him/her for a few favors, using the following phrases:
- I should like very much to hear …;
- We should greatly appreciate your telling us…;
- I am writing to inquire if …;
- I wish to make some inquiries about …;
- Will you kindly inform us whether/if …;
- May we ask you for …;
- Would you be kind enough to …;
- We hope you will …;
- We trust you will …;
- I should be very greatful if you could …;
- According to your request …;
- In accordance with your request …;
- As requested by you …;
- At the request of your …;
- We are glad to answer your inquiry …;
- We are pleased to send you …;
- Here is the information you requested …;
- We shall be pleased to inform you …;
- We wish to inform you …;
- I am making use of this opportunity to approach you with the request ….
Example:
Dear Mr Clark,
I shall be arriving in Moscow on Wednesday 14th, and would be greatful if you could book accommodation at the Rossiya Hotel. Could you also reserve return tickets for me for Tuesday 20th. I would appreciate if you could arrange for a visit to the Bolshoi Theatre. Would it be also possible to include a visit to the Pushkin Museum into our itinerary. Your cooperation would be most appreciated:
Yours sincerely;
Norman Gotsby.
The Body of the Business Letter
The body of the business letter usually includes:
a) Reference;
b) Information;
c) Purpose;
d) Conclusion.
You should begin your letter with a REFERENCE to a letter you have received, an advertisement you have seen, or an event which has promted the writing of your letter.
e.g.: Thank you for your letter of May 3rd . In your letter of January 13th you inquire about… .
It was a great pleasure to receive your letter of July 1st that … .
I recently called your agent in this country to ask about … but he was unable to help me. Sometimes it is necessary to add some detailed INFORMATION related to the reference, in a subsequent paragraph.
PURPOSE is the most important part of the letter, where you are expected to state clearly and concisely what you want and answer carefully and clearly all the questions that you have been asked.
CONCLUSION usually consists of some polite remark to round the letter off.
e.g.: I look forward ( I am looking ) to hearing from you soon.
I sincerely hope you will be able to help me in this matter.
I should greatly appreciate an early reply. Please accept our sincere apologies for the trouble this mistake has caused you. We apologize sincerely for the trouble caused to you, and will take all possible steps to ensure that such a mistake does not occur.
19. Match the parts of the business letter’s body:
| 1) REFERENCE | a) With best regards |
| 2) INFORMATION | b) I refer to the telex of r.Francis dated March 19th,2001, and write ersonally to apologize for the last minute post – ponement of our visit to Moscow on March 21st |
| 3) PURPOSE | c) I look forward now to our meeting on the revised date of Wednesday April 18th, again at 11.30 a.m. |
| 4) CONCLUSION | d) It was considered by my colleagues in Frankfurt to be more appropriate if I took part in the discussion. |
Match the parts of the whole business letter:
| 1) HEADING | a) Yours faithfully, |
| 2) INSIDE ADDRESS | b) We thank you for your letter of 2nd June, together with the enclosed draft which we have studied carefully. We are pleased to advise you that we are prepared to support your proposals in accordance with your latest suggestions. |
| 3) GREETING | c) Dear Sir, |
| 4) REFERENCE | d) We are willing to offer you every assistance and look forward to hearing from you soon. |
| 5) INFORMATION | e) Kindly note that we are ready to enter the talks as soon as you request it. |
| 6) PURPOSE | f) Since the above draft resolves all the out-standing issues we urge you to enter into official negotiations at your earliest con – venience. |
| 7) CONCLUSION | g) The Executive Manager, Richardson, Smollet&Co.Ltd., 4, Boswell Way, Nagstead, Kent, NA 24PJ. |
| 8) COMPLIMENTARY CLOSE | h) R.Thompson, Marketing Manager |
| 9) SIGNATURE | i) October 16th, 2000 |
20. You have found different parts of many letters; choose what phrases you should use: a) at the beginning of a business letter b) in the middle c) at the end
Complete the phrases where it is necessary
1) We have pleasure in informing you………;
2) Yours sincerely;
3) In reply to your letter dated ………;
4) We look forward to a visit of the President ………;
5) We wish to inform you………;
6) Further to our telephone conversation ………;
7) Yours faithfully;
8) We thank you for your letter dated 23rd March, 2000;
9) We have to inform you………;
10) I’m looking forward to meeting you soon;
11) We enclose with the letter the design documents;
12) Best regards;
13) We highly appreciate the work you have done for us;
14) Please, contact us as soon as possible;
15) It allows us to make a decision;
16) Regards;
17) You are kindly requested to study this material and inform us about the decision at your earliest convenience;
18) I look forward to hearing from you;
19) We are ready to assist you in this endeavor;
20) We assure you that we shall fulfill our obligations;
21) In confirming our talk with your representative………;
22) In connection with your inquiry………;
23) We should like to stipulate the fact that ……….