3. Translate into Russian

a) A market is a set of arrangements by which buyers and sellers are in contact to exchange goods or services.

b) Different mar­kets perform the same economic function.

c) Consumption or demand is primarily, but not exclusively, a function of price.

d) Markets determine prices that ensure that the quantity people wish to buy equals the quantity people wish to sell.

e) A consumer buys more, not less, of a commodity at higher prices when a negative income effect dominates over the substitution effect.

f) Prices guide society in choosing what, how, and for whom to purchase.

g) We require a model of a typical market to understand price determination.

h) Inferior goods are those goods and services bought in smaller amounts as consumer incomes rise.

i) In an uncertain economy, especially an inflationary one, price expectation can affect demand.

4.Writing a summary is an useful activity to prepare for any oral task such as retelling or discussion. Here are some clichés to compose a summary:

- the main aim of the text is ….

• the article begins with…

• the text under consideration points out….

• in the text emphasis is also given to…

• in conclusion the text reads….

5. Look through the text once again and write a summary using the clichés above.

Speaking

1. Work in small groups. Think of the model of any market, say fast food, fashion goods or pharmaceutical goods, study the features of that market and see how it works in practice

Section 2. Demand, Supply, and Equilibrium

Key vocabulary

1.Read and remember the following words

conceivable – постижимый, мыслимый

instant – мгновение, момент

bar – плитка

assume – предполагать, допускать

incentive – стимул, побуждение

lucrative [`lu:krәtΙv] - прибыльный

distinction – различие, отличие

adjust - приспосабливаться

decay – разрушение

relevant to – уместный, относящийся к делу

be frustrated – быть расстроенным

shortage – нехватка, недостаток, дефицит

2. Read and translate the groups of words given

range of prices, finite amount, get sick, other things equal, function of its price, complete description, to produce for nothing, schedule relating price and quantity, equilibrium price.

3. Translate the word combinations given from Russian into English

соответствующее увеличение, количество спроса, а именно, средняя цена, удобное сокращение

4. Translate the word expressions given and in simple words explain their meanings

conspicuous consumption, a negative income effect, substitution effect, to want

solely for something, inferior goods, storable commodities, durable goods, substitute products, complementary goods, opportunity costs, elasticity of supply,

bountiful crops

Text

DEMAND, SUPPLY, AND EQUILIBRIUM

1. Listen, read and translate the text

Demand is the quantity of a good buyers wish to purchase at each conceivable price. Thus demand is not a particular quantity, such as six bars of chocolate, but rather a full description of the quantity of chocolate the buyer would purchase at each and every price which might be charged. The first column of Table 1 shows a range of prices for bars of chocolate. The second column shows the quantities that might be demanded at these prices. Even when chocolate is free, only a finite amount will be wanted. People get sick from eating too much chocolate. As the price of chocolate rises, the quantity demanded falls, other things equal. We have assumed that nobody will buy any chocolate when the price is more than £0.40 per bar. Taken together, columns (1) and (2) describe the demand for chocolate as a function of its price.

Table 1. The demand for and the supply of chocolate

(1) price (£ / bar)	(2) demand (million bars / year)	(3) supply (million bars / year)
0.00	200	0
0.10	160	0
0.20	120	40
0.30	80	80
0.40	40	120
0.50	0	160

Supply is the quantity of a good sellers wish to sell at each conceivable price. Again, supply is not a particular quantity but a complete description of the quantity that sellers would like to sell at each and every possible price. The third column of Table 1 shows how much chocolate sellers wish to sell at each price. Chocolate cannot be produced for nothing. Nobody would wish to supply if they receive a zero price. In our example, it takes a price of at least £0.20 per bar before there is any incentive to supply chocolate. At higher prices it become increasingly lucrative to supply chocolate bars and there is a correspond­ing increase in the quantity of bars that would be supplied. Taken together, columns (1) and (3) describe the supply of chocolate bars as a function of their price.

Notice the distinction between demand and the quantity demanded. Demand describes the behaviour of buyers at every price. At a particular price such as £0.30, there is a particular quantity demanded, namely 80 million bars/year. The term 'quantity demanded' makes sense only in relation to a particular price. A similar distinction applies to supply and quantity supplied.

We must recognize that the demand schedule relating price and quantity demanded and the supply schedule relating price and quantity supplied are each constructed on the assumption of 'other things equal'. To understand how a market works, we must first explain why demand and supply are what they are. Then we must examine how the price adjusts to balance the quantities supplied and demanded, given the underlying supply and demand schedules relating quantity to price. Let us think again about the market for chocolate described in Table1. Other things equal, the lower the price of chocolate, the higher the quantity demanded. Other things equal, the higher the price of chocolate, the higher the quantity supplied. A campaign by dentists warning of the effect of chocolate on tooth decay, or a fall in household incomes, would change the 'other things' relevant to the demand for chocolate. Either of these changes would reduce the demand for chocolate, reducing the quantities demanded at each price. Cheaper cocoa beans, or technical advances in packaging chocolate bars, would change the 'other things' relevant to the supply of chocolate bars. They would tend to increase the supply of chocolate bars, increasing the quantity supplied at each possible price.

For the moment, we assume that all these other things remain constant. We wish to combine the behaviour of buyers and sellers described in Table 1 to model how the market for chocolate bars would actually work. At low prices, the quantity demanded exceeds the quantity supplied but the reverse is true at high prices. At some intermediate price, which we call the 'equilibrium price', the quantity de­manded just equals the quantity supplied The equilibrium price clears the market for chocolate. It is the price at which the quantity supplied equals the quantity demanded.

Table 1 shows that the equilibrium price for chocolate bars is £0.30: 80 million bars per year is the quantity buyers wish to buy and sellers wish to sell at this price. We call 80 million bars per year the equilibrium quantity. At prices below £0.30, the quantity demanded exceeds the quantity supplied and some buyers will be frustrated. There is a shortage, what we call excess demand. You will realize that when economists say there is excess demand they are using a convenient shorthand for the more complicated expression: the quantity demanded exceeds the quantity supplied at this price.

At any particular instant, the market price may not be the equilibrium price. If not, there will be either excess supply or excess demand, depending on whether the price lies above or below the equilibrium price. But these forces themselves provide the incentive to change prices towards the equilibrium price. In this sense, markets are self-correcting.

Language practice