V. Answer the following questions:

1. What are transaction costs? '-

2. Why have social arrangements evolved?

3. What are the important social arrangements that set up indirect trade?

4. What is money?

5. What is an intermediary?

6. What may a society evolve in an effort to lower the costs?

7. What other social arrangements lower transaction costs?

8. What kinds of expectations are referred to property rights?

VI. Define the terms: '

direct trade intermediary I

commodity firm -,

property rights indirect trade ■ consumption

VII. Translate into English:

1. rpouji — Lie Te, uio BHKOpMCTOeyeTbcsi npaKTMHHO b ycix yroflax. 2. nocepeamiK oflepxoB 10 BiflcoTKis aip, npoaa-wy uboro roBapy. 3, cDipMM ra p,OMamni rocnoaapcTsa ra-ko>k 3HM)KyroTb neBHi bmak BMTpaT uinnxoM oco6nnsoV opra-Hi3au,n'eKOHOMiHHoV AiflHbHOCTi. 4. fleo«a BaHtnMBMMH hhhmh-«aMM, mo 3a6e3neHyioTb HenpHMy Toprienro, e rpouji i noce-peAHMKM. 5. YroAy npo Kynienro o6naflHaHna 6pmaHCbKoT ciiipMM 6yAe niflnncano wanpHKiHuj tmjkha. 6. 3aranoM, Konn u,iHa yroflu e BennKoio, HenpsiMa ropriBnsi, 6inbiu, hi>k npawa TopriBna, 3Hn>KyBaTkMe BMTpaTM, noB'fl3awi 3 yrofloio. 7. Byflb-nxa eKOHOMJKa Mae BMpiujMTM, sw BMnpaBflaTM cnofliBaHHd Ha MawSyTHe. 8. LJ,si qbipMa ynnaftae yroflu npnMO, 6e3 nocepeft-

HMKJB.

VIII. Read and dramatize the following dialogue:

Mr. Brown: Good morning, Mr. Popovych.

Mr. Popovych: Good morning, Mr. Brown. The weather is

fine today, isn't it? I couldn't help enjoying a bit of

fresh air walking to the office. Do you always have this

kind weather in February? Mr.B.: Yes, as a matter of fact we do. Mr.P.: You're lucky to have so much warmth. I hear it's 15°C

of frost in our country these days.

116

Mr.B.; Oh, is it? Then let's make use of all this warmth to the benefit of our two companies. By the way we discussed our transaction yesterday afternoon but didn't clear up some points. Do you find our prices competitive?

Mr.P.: Not quite, I'm afraid. First of all let's start from the very beginning. There is no objection to the price being fixed and payment being effected in dollars.

Mr.B.: Of course not.

Mr.P.: Secondly, all prices should be firm and we're going to pay cash. That's very beneficial to you, isn't it?

Mr.B.: Yes, quite so. But can we revert to the matter later?

Mr.P-: Tomorrow?

Mr.B.: May be tomorrow or this afternoon.

Mr.P.: O.K.

Mr.B.: What about the down payment?

Mr.P.; I think there's nothing to discuss; it stands as is givejn in the draft contract: 5% against the documents specified in the contract.

Mr.B.: I agree.

Mr.P.: And the last but not the least point. I'll be frank with you, Mr. Brown. I was going to ask for an 8% discount off the price. Bearing in mind the above however, and if you agree to all the prices remaining firm, I'm prepared to have only a 5% discount, that is to cut it almost by half. See?

Mr.B.: Well, Mr. Popovych, I must admit you've taken me somewhat by surprise, but I see your point and I can say if you give us time to study your draft contract and all your suggestions, I hope we could settle all the outstanding problems concerning the price and the terms of payment satisfactory to both parties.

Mr.P.: Agreed. There's nothing left for us to do but go on, is there?

Mr.B.: I'm of the same opinion, Mr. Popovych.

Mr.P.: Our next meeting will be tomorrow at 10 as usual. Good-bye.

Mr.B.: Good-bye.