Test yourself. Complete the sentences.

1. Demand is the quantity of a good______________________________________________________

2. Supply is_________________________________________________________________________

3. When quantity supplied equals quantity demanded there is__________________________________

4. Among factors influencing demand are__________________________________________________

5. Among factors influencing supply are___________________________________________________

6. A good for which demand decreases when consumer incomes increase is called_________________

7. If quantity demanded is less than quantity supplied there is__________________________________

8. Government can regulate business activity through________________________________________

9. Money received regularly by a person, family or organization is called_________________________

10. A standard quality good may be called__________________________________________________

Unit 3.

1. a) Translate the following word combinations from English into Russian.

to maximize utility -
to solve the problem of choice -
to maintain a given level of utility -
to consume goods and services -
to allocate the income -
to result in a reduction -
to reduce the price -
to affect consumption -
to depend on individual demand -
to assume budget constraint -

b) Make your own sentences with four word combinations.

1)

2)

3)

4)

Arrange the sentences according to the text and write down correct sentence order.

1. The concept of marginal utility is very important for solving the utility maximization problem.

2. Theory of demand states that the customer having budget constraint seeks to maximize utility.

3. Market demand is the quantities of a good that all consumers in a particular market wish and are able to buy as price varies and as all other factors are constant.

4. Consumer demand is the quantities of a particular good that a consumer wants and is able to buy as the price varies, if all other factors influencing demand are constant.

5. The factors assumed constant are prices of other goods, income and some non-economic factors.

6. The law of demand is the relationship between the quantity demanded and its price.

7. Increase in the quantity of one good must be followed by reductions in the quantity of the other good.

8. A price increase will result in a reduction in the quantity demanded.

9. The marginal utility of a good is the additional utility obtained from consuming an additional unit of the good in question.

10. Market demand depends on the factors affecting individual demands and on the number of consumers in the market.

11. As the marginal utility from each additional unit of the good consumed decreases, the consumer will want to buy more of this good if its price is reduced.

The correct sentence order: ________________________________.

3. Mark the sentences true (+) or false (-). Correct wrong statements.

1. Consumer demand is the quantities of a good that a consumer doesn’t want and can’t buy.

2. Consumer demand is the relationship between the demanded quantity and its price.

3. Non-economic factors and such factors as prices of other goods and income aren’t constant.

4. Theory of demand is the theory of how many goods and services consumers choose to buy.

5. Increase in the quantity of one good results in the increase in the quantity of the other good.

6. The marginal utility of a good is the additional utility obtained from consuming an additional unit of the good.

7. The law of demand is the relationship between the quantity supplied and its price.

8. Market demand is the demand of all consumers in a particular market as price doesn’t vary.

9. Individual demands and the number of consumers in the market influence the market demand.

Write down the definitions of the following notions from the text.

1. Consumer demand is

2. Theory of demand is

3. Marginal utility is

4. Law of demand is

5. Market demand is

Answer the questions.

1. What is consumer demand?

2. What factors influencing demand are assumed constant?

3. What is the principal assumption of the demand theory?

4. What is marginal utility?

5. How should a consumer allocate his income?

6. How is marginal utility connected with price?

7. What is market demand?

8. How does market demand differ from individual demand?

6. a) Read the text “Income Elasticity of Demand”.

b) Mark the sentences true (+) or false (-). Correct wrong statements.

1. The relationship between price, income and quantity demanded is constant for all goods.

2. The income elasticity of demand shows how much income change influences the consumer demand.

3. The coefficient for food is usually negative in the USA.

4. Goods with negative elasticity are called inferior.

c) Answer the questions.

1. What are two factors influencing demand for a good?

2. How can income change affect the demand?

3. When is the coefficient negative?

4. What are the examples of goods with negative elasticity?