Some useful hints on giving, accepting and rejecting advice .

Giving advice:

Personally, I would advise you to...

I think your best course would be to...

It might be a good idea if you did it.

I strongly advise you to …

I suggest that you should...

Why don’t you ...?

I think you should /shouldn’t ...

I think / don `t think it `s a good idea to …

Accepting advice:

That sounds a good idea.

That seems like good advice. Thank you.

That’s certainly a possibility.

Rejecting advice:

I’m not sure I can do that. You see ... (excuse)

Isn’t there anything else I could do?

I’m sure that’s excellent advice, only...

I’m afraid that’s out of the question.

Unit 2 Utility and Prices

AGENDA

Warm-up

Vocabulary

Reading

Comprehension

Speech Practice

Dialogue

Role -Play

Appendix 2 Vocabulary Revision (Units 1-2)

Section Overview Developing Vocabulary Utility and Prices Reading for a Gist Understanding the Reading Scanning

Reading for Detail

Say it in English

Presentation 2

A New Line of Products

Decision–Making When Buying Food

Reacting to Opinions

Warm-up

Section Overview

According to our basic needs and additional individual wants we require different kinds of commodities. The concept¹⁶ of satisfying a want is known as “utility”. It is related to a number of factors and a utility change is connected with the consumer’s relation to a commodi-ty.

1.1.1. Discuss the following questions in pairs, make use of the prompts in brackets.

1. What is the difference between our basic needs and our addi-tional wants?

(necessities, necessary to survive, luxuries, can live without).

2. Is it possible for an individual to change prices of the goods he

¹⁶ concept – понятие

wants?

(to depend on the situation, fixed prices, market, to bargain over prices).

Vocabulary

accept v – принимать‚ допускать; соглашаться

appropriate adj – соответствующий‚ подходящий‚ уместный available adj – доступный‚ имеющийся в распоряжении‚ наличный bargain n – сделка‚ соглашение‚ выгодная покупка‚ дешевая по-

купка

bargain over smth. v – договориться о чем-либо, торговаться commodity n – товар‚ продукт

concern v – касаться‚ затрагивать, иметь отношение confuse v – смешивать‚ спутывать

customer n – покупатель‚ заказчик‚ клиент diminish v – уменьшать(ся)

do smth in advance – делать ч.-л. заранее‚ заблаговременно emphasis n – акцент‚ особое внимание

emphasize v – подчеркивать‚ придавать особое значение

price emphasis – политика акцентирования цен для стимулирования сбыта

price de-emphasis – ценообразование на основе ощущаемой ценно-сти товара

excess n – избыток‚ излишек‚ превышение expenditure n – расход(ы)‚ затрата‚ трата interfere (in) v – вмешиваться

margin n – разница (между себестоимостью и продажной ценой) marginal adj – предельный

pressure n – давление

price n – цена

price control – ценовой контроль / контроль цен pricing - ценообразование‚ система ценообразования

off-even pricing – установление цены‚ чуть меньше круглой (т.е. $49.95 вместо $50.00)

loss-leader pricing – установление очень низкой цены на товар

(«убыточного лидера») для того‚ чтобы привлечь покупателя

purchase n – покупка

purchase v – покупать

quality n – качество

quality level – уровень качества

quantity n – количество

rate n – ставка; валютный курс; уровень; темп роста rate v – оценивать

relate (to) v – устанавливать связь, определять отношение между чем-либо; относиться‚ иметь отношение

relation n – отношение‚ связь‚ зависимость relationship n – взаимоотношение‚ отношение‚ связь relative adj – относительный‚ сравнительный sacrifice n – жертва‚ убыток

sacrifice v – приносить в жертву, жертвовать sale n – продажа‚ сбыт

sales – распродажа по сниженной цене в конце сезона satisfaction n – удовлетворение

satisfy v – удовлетворять‚ соответствовать‚ отвечать (требованиям) shortage n – дефицит‚ нехватка‚ недостаток stock n – запас, фонд

supply n – снабжение‚ поставка‚ запас; предложение supply v – снабжать‚ поставлять‚ доставлять surplus n – излишек‚ избыток‚ прибыль

tend v – иметь тенденцию

unit n – единица (товара)

usefulness n – польза

utility n – полезность‚польза, потребительная стоимость marginal utility – предельная полезность

Developing Vocabulary

2.2.1. Consult the dictionary and practise the pronunciation of the following words.

Commodity, medicine, characteristic, economy, economics, economists, economical, economic, to confuse, to determine, vegetari-an, submarine, Switzerland, priority, quantity, excess, to relate, relative, relatively, to decrease, increase, stock, majority, minority, to bargain, expenditure, successive, purchase, sacrifice, marginal, argument, desire, to diminish.

2.2.2. Match the English word combinations in the left-hand column

with the Russian equivalents in the right-hand column.

1.	to fix smth in advance	1.	привести к	наилучшему ре-
2.	to be freely available		зультату
3.	an excess of a commodity	2.	договориться о чем-либо зара-
4.	to rate smth highly		нее
5.	to buy at the current price	3.	получить информацию о товаре
6.	to bargain over prices	4.	рассматривать все имеющиеся
7.	The Law	of	Diminishing		предложения (опции)
	Marginal Utility		5.	иметься в свободном доступе
8.	to plan expenditures	6.	оценивать что-либо высоко
9.	to interfere in smth through	7.	цена на единицу продукции
	smth			8.	расширять	ассортимент това-
10. a successive purchase		ров
11. to vary in relation to smth	9.	планировать расходы
12. fixed prices			10.	оценивать	уровень качества
13. to	charge	an	appropriate		продукта
	price			11.	избыток какого-либо товара
14. to	introduce	new items of	12.	назначать подходящую цену
	goods			13.	закон об убывающей предель-
15. to consider the options avail-		ной полезности
	able			14.	покупать	по	действующей
16. to result in the best deal		цене
17. to	evaluate	the	quality level	15.	торговаться по поводу цен
	of a product			16.	вмешиваться во что-либо по-
18. to obtain product information		средством чего-либо
19. per unit cost			17.	последующая покупка
					18.	изменяться	по	отношению к
						чему-либо
					19.	твердые цены

Reading

Utility and Prices

1 __________

Our basic needs are simple, but our additional individual wants are often very complex. Commodities of different kinds satisfy our wants in different ways. A banana, a bottle of medicine and a textbook satisfy very different wants. This characteristic of satisfying a want is known in economics as «utility». Utility, however, should not be con-fused with usefulness. For example, a submarine may or may not be useful in time of peace, but it satisfies a want. Many nations want sub-marines. Economists say that utility determines «the relationship be-tween a consumer and a commodity».

2 __________

Utility varies between different people and between different na-tions. A vegetarian does not want meat, but may rate the utility of ba-nanas very highly, while a meat-eater may prefer steak. A mountain-republic like Switzerland has little interest in submarines, while mari-time nations rate them highly.

Utility varies not only in relation to individual tastes and to geog-raphy, but also in relation to time. In wartime the utility of bombs is high, and the utility of pianos is low. Utility is therefore related to our decisions about priorities in production. The production of pianos falls sharply in wartime.

3 __________

The utility of a commodity is also related to the quantity, which is available to the consumer. If paper is freely available, people will not be so much interested in buying too much of it. If there is an excess of paper, the relative demand for paper will go down. We can say that the utility of a commodity therefore decreases as the consumer’s stock of that commodity increases.

4 __________

In most economic systems, the prices of the majority of goods and services do not change over short periods of time. In some systems it is of course possible for an individual to bargain over prices, because they are not fixed in advance. In general terms, however, the individual cannot change the prices of the commodities he wants. When planning his expenditure, he must therefore accept these fixed prices. He must also pay the same fixed price no matter how many units he buys. A

consumer will go on buying bananas for as long as he continues to be satisfied. If he buys more, he shows that his satisfaction is still greater than his dislike of losing money. With each successive purchase, how-ever, his satisfaction compensates less for the loss of money.

A point in time comes when the financial sacrifice is greater than the satisfaction of eating bananas. The consumer will therefore stop buying bananas at the current price. The bananas are unchanged: they are no better or worse than before. Their marginal utility to the con-sumer has, however, changed. If the price had been higher, he might have bought fewer bananas; if the rice had been lower, he might have bought more.

5 __________

It is clear from this argument that the nature of a commodity re-mains the same, but its utility changes. This change indicates that a special relationship exists between goods and services on the one hand, and a consumer and his money on the other hand. The consumer’s de-sire for a commodity tends to diminish as he buys more units of it. Economists call this tendency the Law of Diminishing Marginal Utility.

6 __________

The interaction of buyers and sellers determines the price for goods and services. If the price is too low, a shortage will develop, thereby driving up the price. If the price is too high, a surplus will de-velop and move the item’s price down. A society may interfere in mar-ket prices by means of price controls, and ration stamps. Price controls are often used in times of severe shortages to make sure that the prices for important items, such as food and gasoline, do not go too high. In the early 1990-s people in the Russian Soviet Republic were issued ration stamps for butter, sugar, sausage, tins, matches and some other necessities. Thus a person was able to get the minimum amount of these goods needed to survive.

7 __________

Speaking about a market economy, prices are the result of the needs of both buyers and sellers. The sellers will supply more goods at higher prices than at lower ones. The buyers will buy more goods at lower prices than at higher ones. Some price is satisfactory to both buy-ers and sellers. At that price the supply-quantity offered for sale-equals the demand-quantity people are willing to buy. Since no surplus or shortage exists, there is no pressure on price to change. This point is called an equilibrium price. At the equilibrium price, the amount pro-

ducers will supply and the amount consumers will buy are the same.

Notes on the Text

1. mountain-republic – горная республика (страна)

2. maritime – морской

3. means of price controls – механизмы регулирования цен

4. ration stamps – талоны‚ продуктовые карточки

5. to issue – зд.: выдавать‚ отпускать

6. equilibrium price – равновесная цена

Comprehension

Reading for a Gist

Choose the most suitable heading from the list A-H for each part (1-7) of the text. There is one extra heading which you do not need to use.

A. Marginal Utility

B. Economic Characteristic of Satisfying a Want

C. The Law of Diminishing Marginal Utility

D. Utility in Relation to Individual Tastes/ Geography and Time

E. Price Determiners and Price Controls

F. Fixed Prices of Consumer Goods

G. The More the Consumer’s Stock the Less the Utility

H. The Point of no Surplus or Shortage

2.4.2.Understanding the Reading

Give extensive answers to the questions. Use the following expressions to start your answers:

The way I see it...;

From what I know...;

It’s absolutely true that...;

If I remember correctly;

I’m sorry I don’t know much about it, but….

1. What are the two ways of describing utility?

2. What example is used to show that utility varies from person to

person, from nation to nation and from time to time?

3. In what way is utility related to quantity?

4. What is it that an individual is generally unable to change? Why?

5. Why does a customer go on buying a commodity? What happens with each successive purchase?

6. At what point will the consumer stop buying the commodity at the current price?

7. What does a utility change indicate?

8. What happens when the financial sacrifice is greater than the satis-faction of consuming the goods?

9. What tendency is called the Law of Diminishing Marginal Utility?

10. What is the reason for the introduction of price controls and ration stamps?

2.4.3.Scanning

Say whether these statements are true (T) or false (F), in case they are false correct them.

e.g. I reckon it is true that...

I am inclined to think it is false that... because...

T P 1. The utility of a commodity is also related to the quantity

which is available to the consumer.

T F 2. The sellers will supply more goods at lower prices than at

higher ones.

T F 3. At the equilibrium price, the amount producers will supply

and the amount consumers will buy are different.

T F 4. Price controls are often used in times of severe shortages to

make sure that the prices for important items, such as food

and gasoline, do not go too high.

T F 5. If the price is too high, a surplus will develop and move the

item’s price up.

T F 6. The utility of a commodity is also related to the quantity

which is available to the consumer.

T F 7. If there is a shortage of paper, the relative demand for paper

will go down.

T F 8. If the price is too low, a shortage will develop, thereby driving

up the price.

T F 9. A society may interfere in market prices by means of equilib-rium prices.

T F 10. Utility varies not only in relation to individual tastes and to geography, but also in relation to time.

2.4.4.Reading for Detail

Choose the correct terms according to the definitions.

1.	usefulness	The concept of satisfying a
	expenditure	want that determines “the rela-
	surplus	tionship between a consumer
	utility	and a commodity”.
	shortage
2.	utility change	The tendency that indicates the
	financial sacrifice	consumer’s desire for a com-
	equilibrium price	modity to diminish as he buys
	the Law of Diminishing	more units of it.
	Marginal Utility
	market economy
3.	severe shortage	It is a point when the financial
	relative demand	sacrifice is greater than the sat-
	marginal utility	isfaction of buying goods.
	individual want
	equilibrium price
4.	basic needs	They are used in times of se-
	commodities of different	vere shortages to make sure
	kinds	that the prices for important
	successive purchases	items do not go too high.
	price controls
	market prices
5.	prices	They are the result of the needs
	sales	of both buyers and sellers in a
	goods	market economy.
	services

	ration stamps
6.	fixed price	This is a point when the supply
	current price	equals the demand and there is
	market price	no pressure on price to change.
	equilibrium price
	marginal utility

Speech Practice

2.5.1.Say it in English

A. Replace the Russian words and phrases by suitable English equiva-lents in the appropriate form.

1. We (удовлетворять) our needs or wants with goods of differ-ent kinds.

2. A product’s (полезность) may be very high in a certain part of the world, while in a different part of the world the same prod-uct isn’t (оценивать высоко).

3. In the majority of systems prices are (твердые) but in the mi-nority it is possible (торговаться).

4. We know that a consumer’s (удовлетворение) is greater than his (финансовая жертва) if he goes on buying a product at (по действующей цене).

5. (Закон об убывающей предельной полезности) is the name which economists give to (тенденция к уменьшению) for a consumer’s desire as he buys more units of the same commodi-ty.

6. When a consumer (планировать расходы) he must accept (твердые цены).

7. With each (последующая покупка) however, the satisfaction compensates less for (потеря денег).

8. (Финансовый убыток) becomes too great when the quality of the commodity increases.

9. The demand for the commodity goes down if (количество) of the commodity increases.

B.1.Согласно нашим основным нуждам и индивидуальным до-

полнительным потребностям нам необходимы различные виды товаров, которые удовлетворяют наши потребности по-разному.

2. Экономисты определяют способность товара удовлетво-рять потребности (желания) как его полезность. Полез-ность определяет взаимосвязь между потребителем и това-ром.

3. Полезность товара уменьшается по мере того‚ как его запас у потребителя увеличивается.

4. Покупатель не может изменить цены на товары‚ которые он хочет купить. Эти цены установлены заранее‚ что дела-ет невозможным попытки торговаться по их поводу.

5. Уровень качества товара влияет на его цену: чем выше ка-чество‚ тем выше цена.

6. Во времена дефицита правительство может применять це-новой контроль‚ чтобы регулировать цены на такие това-ры‚ как продукты питания и горючее.

2.5.2.Presentation 2

Sum up everything you came to know about the concept of “utility” and the number of factors it is related to. Think about the nature of utility changes and how the governments can regulate the prices.

Make up a presentation on the topic “Utility and Prices”. Arrange your speech with the topic sentence, several developers, a restatement and a conclusion. Be enthusiastic to give your personal view on the topic of speaking or the text itself. Present your speech using the fol-lowing helpful phrases:

Topic sentence:

The text we have read	touches upon	such a question /
in Unit II	covers	problem /
		topic as …

· The real issue here is …

Developers:

· Primarily, I `d like to speak of / about …

· To start / begin with, the text runs about …

· Moving on to …, I `d like to emphasize …

· Turning to …

· When it comes to …

· Speaking about …

· Leaving the question of … to one side, I now wish to consider

· A classic example /case of this is …

· Moreover / furthermore …

Restatement and conclusion:

· As I have already said, …

· To put it another way …

· To put it in a nutshell …

· On the whole …

· In short …

· So, you see …

· To sum up, …

· Lastly / finally …

· In my opinion …

· From my point of view, …

Dialogue

A New Line of Products

Complete the dialogue with words and word combinations from the box below in the correct form:

(1) to determine the number of sales

(2) to concern

(3) price emphasis

(4) to emphasize low prices

(5) off-even pricing

(6) to encourage sales

(7) to increase the demand for

(8) stock

(9) to advertise

(10) price de-emphasis

(11) to introduce new items of goods

(12) to charge the appropriate price

(13) “loss leader” pricing

(14) to produce a favourable psychological effect

Brendon made a tradeoff between college education and immedi-ate economic well-being in favour of the latter and started the business of his own, but he still needs advice from his friend Mary who decided that further education is worth money and effort. They are discussing a new line of products in Brendon’s shop.

BYou know, the shop has been selling well since I started, but I reck-

on that consumers may stop buying things if I don’t 1.

.

MCor! Hasn’t your new line of merchandise2. goods in yourshop?

BThat’s what I wanted to talk to you about. I wonder⁴ if this time we

3. . Previous time the demand for the new 4. of

merchandise dropped very quickly. Can you give some ideas how to charge prices?

MIf I remember correctly, there are two types of pricing policy:

5. and 6. .

BCan you explain the difference?

M From what I know the price emphasis policy 7. . This 8.

But it has a weak point, I mean that low prices don’t give extraservices.

BTrue enough. With a really low price the customer will have no credit, home delivery, repair, installation and other services.

MThat’s what I mean. But many people are interested only in the low

price and not in the extra services,

BThat’s one way of looking at it, but I have to think thoroughly

about it, because the price 9. .

M You have my full support! A good example of price emphasis is

10. . It means that you choose one item and sell it at a very low price. The customers who buy this «loss leader» can decide to buy a few other things they need.

BIt sounds interesting. What other things can you tell me about pric-

	ing policy?
MThere is also 11.	. For example, you sell tape recorders for
	$79.95 instead	of $80.00.	Though it is in fact about the same, the
	low price can 12.	.

BWhat are the other ways to attract the customers?

MYou must start with especially low prices to compete with well-

known goods. Mind that it’s important 13. this. Please, do

consider my words very carefully. You should use newspaper ads, maybe do a big window and floor display.

BIt makes sense. But I wonder if I can raise the price when my cus-tomers get accustomed to a new brand.

MYes. They will continue to buy it.

BI see. And what about the price de-emphasis?

MIt 14.high quality expensive items. You don’t call attention to

the price at all.

BI take your point. I’m so grateful to you for your professional hints. Don’t forget you have a discount on any shopping you do in my shop.

Notes on the Dialogue

1. tradeoff – разг. компромисс‚ взаимные уступки

2. the latter – последний (из двух названных)

3. reckon – думать‚ предполагать‚ придерживаться мнения

4. I wonder – интересно

5. extra services – дополнительные услуги

6. thoroughly – тщательно

7. $79.95 – seventy nine dollars ninety five

8. to attract the customers – привлечь покупателей

9. It makes sense. – В этом есть смысл.

10. to get accustomed – привыкать‚ привыкнуть

11. brand – торговая марка

Exercises on the Dialogue

1. Decide which English words and word combinations correspond to the following.

Благосостояние, открыть свое дело, нуждаться в совете друга,

пополнить ассортимент товаров, стимулировать продажу, спрос на товары снизился, назначать (устанавливать) цены, дополнитель-ные услуги, придавать особое значение низким ценам (акцентиро-вать низкие цены), ремонт, установка, быть заинтересованным, поддержка, единица товара, практически одинаково, привлечь по-купателя, иметь ввиду, рекламные объявления в газете, демон-страция (выставка, показ), привыкать, торговая марка, быть благо-дарным, скидка, делать покупки, производить благоприятный пси-хологический эффект, конкурировать.

2. A.Find in the dialogue and say it differently:

a) to begin - …

b) to think - …

c) to buy things - …

d) a new line of products - …

e) ideas - …

f) to think thoroughly - …

g) one item - …

h) to get used to - …

i) consumers - …

j) to quote prices - …

В .Explain the meaning of these words and expressions in Eng-lish. Make use of the dialogue:

· to start the business of one’s own;

· to introduce a new line of products in a shop;

· extra services;

· “loss leader”;

· to attract the customers;

· to advertise;

· high quality expensive items;

· to have a discount

3. Look through the dialogue and write out all the phrases that keep up the conversation. Take into account some useful hints on giving, accepting and rejecting advice of Unit 1 (See Appendix 1). Make up short dialogues between you and your friend according to the fo l-lowing patterns:

Pattern A:

You: Can you share some ideas how to charge prices?

Your friend: Yes, of course, I’m at your service.

Pattern B:

You: That’s one way of looking at it, but you have to think thoroughly about it.

Your friend: True enough. I do consider your words carefully.

4. Reproduce the dialogue in pairs.

5. You have decided to start the business of your own and you need some advice from your friend who is about to graduate the university as a Bachelor of Economics. You are discussing some important points to start the business.

Role – Play