Ex. 17. Find the false sentences and correct them using the information from the text

1. To make a sale you need three parties: buyers, sellers and producers.

2. The lower price, the greater the incentive to produce and sell the product.

3. If it costs sellers less to produce their products, they will be able to offer more of them for sale.

4. Improvements in technology tend to increase the cost of production.

5. There are few producers that can make more than one product.

6. Equilibrium price and quality is the point at which the quantity demanded exactly equals the quantity supplied in a market.

7. Shifts in demand and supply don’t affect market price.

8. When the market is cleared it means that there can be either surpluses, or shortages in the market.

Ex. 18. Finish the following sentences.

1. The higher price …

2. At lower prices less …

3. It takes two parties …

4. If produces expect prices to increase in the future, …

5. Shifts in demand or supply …

6. A shortage exists in the market if …

7. When the market is cleared it means …

Ex. 19. Answer the questions.

What is supply?

Why do producers supply things?

What are the changes that can affect the quantities supplied?

What is the effect of changing in the technology on producing goods?

If producers expect prices to increase in future why do they increase their production now?

What is market equilibrium?

How do shifts in demand or supply affect market price?

When does a shortage exist in a market?

What does a surplus in a market imply (подразумевает)?

When are there no surpluses and shortages in a market?

QUESTIONS FOR DISCUSSION

1. What effect do consumers have on the economy when they increase or decrease the amount of their purchases?

2. Companies watch for changes in lifestyle of people having in mind (иметь в виду) that people today place value on doing things quickly and easily. Give examples of such goods.

3. The more goods producers sell in a market, the better off (богаче) are consumers.

4. Often shops reduse their prices at certain times of the year. Why do they do this?

5. The price of a product varies at different times and places. Using the law of supply and demand, explain the difference in prices between the paired goods.

a) Melons in January are more expensive than melons in July.

b) Bread baked this morning is more expensive than bread baked yesterday.

c) A can of cola on the beach is more expensive than a can of cola in the local supermarket.

d) Winter clothes on the store rack in November is more expensive than it is in March.

UNIT 6 ECONOMIC SYSTEMS

DISCUSSION

Discuss these questions with your group mates.

1. What is meant by the word “system”? How do you understand it?

2. What systems do you know? Give your examples.

3. To what system do you belong?

Text 1

TRADITIONAL ECONOMY

VOCABULARY

to determine – определять

efficient – эффективный

to allocate factors of production – размещать факторы производства

to provide answer – давать ответ

available resources – имеющиеся и распоряжении ресурсы

to rely upon government – полагаться на правительство

remote areas – отдаленные районы

isolated tribes – изолированные племена

rural area – сельская местность

generation – поколение

the selection of crops – выбор зерновых культур

to sustain – поддерживать

harvest is poor – урожай плохой (бедный)

to survive – выживать

tribal chief – вождь племени

landowner – землевладелец

custom – обычай

remains– остатки

The central problem of economics is to determine the most efficient ways to allocate the factors of production (natural resources, human resources and capital) and solve the problem of scarcity created by society’s unlimited wants and limited resources. In doing so, every society must provide answers to the same three questions:

- Whatgoods and services are to be produced and in what quantities are they to be produced?

- How are those goods and services to be produced?

- Who will receive and consume them?

Societies and nations have created different economic systems to provide answers to these

fundamental questions.

An economic system is the way in which a country uses its available resources (land, workers, natural resources, machinery, etc.) to satisfy the demands of its population for goods and services. The more goods and services that can be produced from these limited resources the higher the standard of livingof the population.

If we look at the different political and social structures which exist in the world today, and the way in which these systems have developed over the years, we can say that people use a very great varieties of economic systems. In fact, it is possible to group these different economic structures into four broad categories:

• traditional economy which looks to customs and traditions
• planned or command economy which rely upon governments to provide the answers
• market economy in which market prices answer most of What, How and Who questions.
• mixed economy, which is a mixture of command and market economies.

The traditional economy. The answers to the What, How and Who questions are decided by traditions in these economies. Traditional economy systems are usually found in the more remote areas of the world. Such systems may characterize isolated tribes or groups or even whole economies. Typically, in a traditional economy most of the people live in rural areas and their main activities are agriculture, fishing or hunting. The goods and services in such a system are those that have been produced for many years or even generations in a way they have always been produced. In short, the division of land among the families in the village or tribe, the methods and times of planting and harvesting, the selection of crops, and the way in which the product is distributed among the different groups are all determined by very slowly changing traditions.

The basic economic problems do not arise as problems to be discussed and agued about. They have all been decided long ago. Who gets what is produced in such an economy? Since there is little produced, there is little to be distributed. Most individuals live very poor, they have enough to sustain them but not more than that. In some years, when the harvest is poor, some are not able to survive and either leave the society or die. In better years, when the harvest is high there may be more than enough to survive. When such a surplus exists, it is distributed traditionally. The most part of the product may go to a tribal chief or large landowner, while the remains are distributed according to customs.

WORD STUDY EXERCISES