Price Ceilings and Price Supports

During national emergencies (чрезвычайные обстоятельства), the gov­ernment sometimes imposes limits on prices, not allowing them to reach their equilibrium level. For example, during World War II, the governments did not allow the prices of foodstuffs to rise to their equilibrium levels, as they felt that it would be unfair (несправедливый) and highly unpopular. As a result, quantity demanded exceeded the quantity supplied. In other words, there was shortage.

the price system is not allowed to do the rationing (нормирование продуктов), some formal system of rationing or allocating the available sup- P У of the product may be needed. Thus, in World War II, families received ton coupons which determined how much they could buy of every com­modity. And in 1979, when the Organization of Petroleum Exporting Coun­tries cut back oil production and reduced exports of oil to the United States, there was serious talk there that gasoline and oil might be rationed. Such ra­tioning schemes may work well in emergencies (over short periods of time), but they can result eventually in serious problems, as prices are not allowed to regulate production and consumption.

Consider, for example, the rent ceilings that have been imposed on some apartments in New York City. First, the purpose of these ceilings was to pre­vent (предотвращать) rents from rocketing up during World War II. It has resulted in a shortage of housing in New York City. Because they have pushed the price of housing below the equilibrium price, less housing has been sup­plied than has been demanded. The lower price of housing has kept investors from building new housing, and has made it unprofitable for some owners of housing to maintain their buildings. It is socially desirable to allocate more resources to New York housing, but the rent ceilings have prevented this.

Governments may also impose price floors - or price supports, as they are often called. The assumption is that they allow producers of the good in ques­tion to maintain their revenues at a higher level. For example, the federal government has imposed price supports on a lot of agricultural commodities that might increase farm incomes. The result is that the quantity supplied exceeds the quantity demanded at the floor price. Thus, there is a surplus of the commodity - and, in the case of (в случае) agricultural commodities the government has to buy up and store these surpluses.

1. When do governments usually impose limits on price?

2. What examples of government regulations of prices are given in the text? What were their results?

3.Is government regulation of prices desirable?

б) Подумайте и скажите:

1. What other examples of government rationing of foodstuffs and other goods do you know? What were the reasons for it?

2. Are there any price limits in Russia at present? If there are any, give examples.

TEXT B

а) Прочитайте текст, в котором даются советы англичанам, отправляющимся в пу­тешествие, и ответьте на следующие за ним вопросы.

On the Money-go-round

Money - usually the lack of it - is a universal problem for travellers. What­ever the amount they take, there is a variety of ways to carry it. Since each has both advantages and disadvantages, a combination of two or three is advisable, the mixture depending on financial circumstances as well as destination.

Traveller's Cheques: will be replaced if lost or stolen, theoretically within 24 hours. You pay 1 to 1.5 percent of the value of the cheques (and maybe a fixed handling fee if you are buying in any of the 20 plus foreign currencies) but usually get a better rate when cashing them. In any of the Americas be sure to carry dollar cheques.

Foreign Currency: Carry a small amount (for taxis, porters, telephone calls, snacks) until you can get to a bank. Most UK banks need advance notice of your requirements, otherwise change sterling at the airport or port (though exchange rates are less favourable).

The commission and rate of exchange vary but shopping around (искать более выгодные условия) is rather impractical. Some countries (in particu­lar, Greece) restrict the amount of their currency that you can import. You should also carry some sterling for necessary expenses when you return.

Postcheques: Each cheque, when accompanied by a Postcheque Card (in­cluded free with your first order of cheques) can now be used to draw up to £100 in local currency from 90,000 post offices in most of Europe and around the Mediterranean as well as Hong Kong, the Bahamas and Japan.

Credit Cards: Access (linked to Mastercard in the United States and Euro- card in Europe) and Barclaycard (linked to Visa) are accepted in nearly five million outlets each though they vary in their acceptability - Barclaycard, for example, is stronger in France, Spain and Italy, whereas Access is most useful in Germany and the United States. Their acceptance in Continental petrol stations, too, is not always certain.

They may also be used for cash advances and instead of a deposit on car hire.

Charge Cards: American Express and Diners Club are less widely accepted than credit cards and the interest-free settlement period is shorter but there is ⁿo pre-set spending limit. In addition to the initial starting and annual fee for the cards, both charge a one-percent processing fee for bills converted back into sterling.

Eurocheques: can be used to withdraw local currency as well as pay fo_r hotels, restaurants, garages and other services in nearly five million, mostly European, outlets. The cheques, made out to the exact amount you require, are then debited to your account in the same way as a domestic cheque.

Individual Cheques: can be cashed for up to a maximum of £100 or the equivalent in local currency.

There is no limit to the number of cheques you can use to make a pur­chase. You pay around £3.50 for the card and there is also a commission of 1.25 percent on the value of the transaction, plus roughly a 30-pence han­dling fee per cheque.

1. What happens if you lose your traveller's cheques?

2. Where should the British traveller exchange sterling into foreign currency?

3. Why is the British traveller advised to carry sterling?

4. Where can you use Postcheques?

5. What are the advantages of credit cards?

6. What disadvantages do charge cards have?

7. How do you pay for Eurocheques?

8. What isthe limit of a Eurocheque?

TEXT C