Summary Points

1. Read the passage. What title can you suggest?

Most of the money used by business comes from the sale of its products and services. Since these funds come from within the firm they are described as internal funds. The rest must come from outside, or external funds.

As a firm sells its products or services, it receives money, which it uses to meet its expenses. One of these expenses, depreciation, represents the cost of replacing assets (like tools, machinery, and buildings) that wear out. Typically, businesses use internal funds to cover the cost of depreciation.

Notes:

internal / external – внутренний / внешний

depreciation – изнашивание (в результате износа и морального устаревания); списание стоимости;

wear out – изнашивать(ся)

2. What is the main idea of the passage?

3. What have you learned from this passage? Use the given expressions.

The author describes (discusses, studies, offers, states, analyzes) …	автор описывает (обсуждает, изучает, предлагает, утверждает, анализирует) …
On the one hand … on the other hand …	С одной стороны…; с другой стороны …
After reading the passage I have understood …	Прочитав отрывок, я понял(а) …

Unit 8

MARKETS AND PRICES

Lead-in

1. Express your opinion on the following issues.

1. How would you define the term “market” in your own words?

2. What factors influence prices in the market?

2. Finish the phrase.

- If I were a marketer, I would ……….

Key Vocabulary

Study the following list of vocabulary.

1. arrangement n	договорённость, соглашение
2. stock exchange	фондовая биржа
3. intermediary n	посредник
4. transact v	вести дела, заключать сделки
5. on behalf of smb	от имени кого-либо
6. scope n	масштаб
7. competition n	конкуренция
8. preference n	предпочтение
9. price n	цена
10. entrepreneur n	предприниматель, бизнесмен
11. currency n	валюта
12. securities n	ценные бумаги
13. flexible adj	гибкий, эластичный
14. outcome n	итог, результат
15. take into account/consideration	принимать во внимание
16. cash n	наличные деньги

Pre-reading Activities

1. Study the meanings of the following concepts.

1. perfect competition – чистая конкуренция: рыночная структура, при которой большое число фирм предлагает однородный продукт и ни одна фирма не имеет достаточно большой доли рынка; в результате производитель не имеет контроля над ценой, по которой продаётся продукция и может манипулировать только объёмом своего выпуска.

2. monopolistic competition – монополистическая конкуренция: рыночная структура, относящаяся к несовершенной конкуренции, при которой фирмы конкурируют, но при этом имеют черты монополий, поскольку производят дифференцированный продукт.

3. monopoly – монополия: рыночная структура, характеризующаяся наличием на рынке какого-либо блага единственного продавца и большого количества покупателей, отсутствием совершенных заменителей продукции продавца, отсутствием свободы входа на рынок; в силу этих характеристик продавец обладает абсолютной властью над рыночной ценой.

4. oligopoly – олигополия: рыночная структура, характеризующаяся существованием на рынке незначительного числа продавцов при наличии большого числа покупателей.

2. Translate the sentences into Russian. Mind the words from exercise 1.

1. Monopoly is known as a situation in which one seller controls the total supply.

2. Each oligopolistic firm keeps a close eye on the activities of other firms in the industry.

3. The retail gas market is a good example of an oligopoly, because a small number of firms control a large market share.

4. The real world is widely populated by monopolistic competition.

5. The best examples of monopolistic competition come from retail trade, including restaurants, clothing stores, and convenience stores.

6. Perfect competition is an idealized market structure which achieves an efficient allocation of resources.

Reading

Read the text and answer the questions that follow it.

The study of markets and other ways of organizing production of goods and services is an important task of economics.

In ancient times a market was a place where people gathered to buy and sell goods. Nowadays the term «market» has a broader sense. According to its definition, market is a set of arrangements by which buyers and sellers are in contact to exchange goods and services. It is considered to be the institution through which buyers and sellers interact.

The interaction may be different. For example, street markets, fruit stalls and shops physically bring together buyers and sellers. At the same time, suppliers and customers can interact through more complex markets. The Stock Exchange is known to operate through intermediaries (stockbrokers) who transact business on behalf of their clients. At the century of IT boom people can make exchanges on the phone. They are in the market even if they don’t actually visit a store. Similarly, people can order goods and services by mail or on the Internet, where it is possible to make deals all over the world. And again they are in the market because they make a voluntary exchange, when both parties benefit.

As for their scope, markets can be local, national and international. Economists classify markets according to prevailing conditions and try to determine a market structure. There are specific names for different market structures. They are pure competition, monopolistic competition, monopoly and oligopoly.

The preferences of sellers and buyers are determined by the supply and demand in various markets and the outcome of these preferences is a system of prices. A price is the main index which sellers, entrepreneurs and consumers take into account while making their free choice according to their self-interests. In economics, the term “price” denotes consideration in cash for the transfer of something valuable, such as goods, services, currencies, securities, etc.

Prices perform two important functions: they ration scarce resources and motivate production. As a rule, the more scarce something is, the higher its price will be and the fewer people will want to buy it.

Prices play an important role in different markets. If there were no price system, it would be impossible to determine value of any goods or services. For example, in a market economy prices act as signals. Buyers and sellers use prices as signals to communicate their wants and then exchange money for goods and services. So, a high price is a signal for sellers to produce more and for consumers to buy less. A low price is a signal for sellers to produce less and for consumers to buy more. That is why prices serve as a link between producers and consumers. Moreover, in a market economy the price system is flexible and it can adjust to changes quite quickly.

Comprehension Check

1. Answer the following questions.

1. What was the role of market in ancient times?

2. What definition of the term “market” is given in the text?

3. According to their scope, how are markets classified?

4. What examples of market structures are given in the text?

5. What does the term “price” mean?

6. What are the basic functions of prices?

7. What do prices mean as signals?

2. Choose the paragraph, where different kinds of interaction between buyers and sellers are described.

A. 2 B. 3 C. 5

3. Choose the sentence which best summarizes the last paragraph of the text.

A. In a market economy the price system is flexible.

B. A low price is a signal for sellers to produce less and for consumers to buy more.

C. Prices play an important role in different markets.

Vocabulary Focus

1. Match the words with their definitions.

1. monopoly	a. a form of imperfect competition that exists when there are many producers or sellers of similar but differentiated goods and services
2. oligopoly	b. an event or occasion, usually held at regular intervals, at which people meet for the purpose of buying and selling goods and services
3. monopolistic competition	c. exclusive control of the market supply of a product or service
4. perfect competition	d. a market situation in which control over the supply of goods is held by a small number of producers each of whom is able to influence prices and thus directly affect the position of competitors
5. market	e. a market situation in which there exists a homogeneous (однородный) product, freedom of entry, and a large number of buyers and sellers none of whom individually can affect prices

2. Use the words from the list of Useful Vocabulary to complete the sentences.

1. Price elasticity is only one of the problems studied by economists in the theory of demand and …...

a. competition

b. currency

c. supply

2. The marketing concept says that marketing managers should meet the needs of …...

a. securities

b. consumers

c. entrepreneurs

3. The ….. of some goods doesn’t vary greatly within a particular market as all sellers impose practically the same prices.

a. price

b. outcome

c. scope

4. ….. often leads to lower prices and the introduction of differentiated products.

a. stock exchange

b. arrangement

c. competition

5. Some experts say a ….. is a person who can create out of nothing a viable business.

a. entrepreneur

b. buyer

c. seller

3. Give the English equivalents to the following expressions.

- международный рынок

- определить стоимость товаров и услуг

- рыночная экономика

- гибкая цена

- заказывать товары и услуги по почте

- покупать и продавать товары и услуги

- спрос и предложение

Talking Points

1. Give your arguments to support the following statements.

A. Marketing helps people satisfy their needs and wants.

B. Prices serve as a link between producers and consumers.

2. Express your opinion on the following points.

1. If you had such a chance, what goods and services would you promote in the Belarusian market? Explain your choice, using the following expressions.

- I think …

- In my opinion …

- To my mind …

- As for me …

- It seems to me …

2. Prove or disprove that price stability (i.e. keeping inflation low) is more important than other economic aims, such as attempting to reduce unemployment.

Summary Points

1. Look through the text from Reading once more and divide it into 6 logical parts.

2. Fill in the missing points in the plan of the text.

I. What is market?

II.

III.

IV.

V. Functions of prices.

VI. The role of prices in different markets.

3. Use the plan of the text to summarize its contents.

Unit 9

FACTORS OF PRODUCTION

Lead-in

1. Of the three factors of production in classical economics – land, labour, and capital – land may be the most difficult to define. In your opinion, does it refer just to the land itself?

2. Do you agree that understanding the factor of entrepreneurship is an important part of understanding the dynamics of the market economy? Why?

Key Vocabulary

Study the following vocabulary and do the task that follows.

1. create v	создавать
2. inputs n	затраты на производство
3. distinguishable from	отличимый от
4. natural resources	природные ресурсы
5. deposit n	залежь, месторождение
6. oil n	нефть
7. activity n	деятельность
8. demands n	потребности
9. undertake action	предпринимать действие
10. assist v	помогать
11. entrepreneurship n	предпринимательство
12. take place	иметь место, случиться
13. risk-bearing n	принятие риска
14. carry out v	выполнять
15. sole-proprietor n	частный предприниматель
16. share v	делить

Pre-reading Activities

1. Use key vocabulary to complete the sentences.

1. Macroeconomics studies the total output of a nation and the way the nation allocates its limited … of land, labor and capital.

a) resources b) oil c) activity

2. A customer's … are usually safety, quality, and value.

a) deposits b) resources c) demands

3. If you … ownership of your business with someone else, your business will not be a sole proprietorship.

a) assist b) share c) create

4. Inform me where the conference will ….

a) undertake action b) carry out c) take place

5. Management skills can be a separate factor of production called ….

a) inputs b) entrepreneurship c) risk-bearing

6. My secretary … in making the decision.

a) assisted b) shared c) carried out

Reading

Read the text and find out what factors of production are.

Economists have long recognized the three major factors that people use to create the things they want. Land, labor, and capital are "factors of production”, or “inputs”. Each factor plays an important role in the production of goods, and each factor is clearly distinguishable from the other two.

Land includes not only the site of production but natural resources above or below the soil. These are agricultural land, mineral deposits, forest, rivers, lakes, oil deposits, mountains, etc. Land is a passive factor in production. To make the gifts of nature satisfy our needs and desires, human beings must do something with natural resources. This activity is called labour.

Thus, labour is human effort – physical and mental – which is directed to the production of goods and services. But labour is not only a factor of production, it is also the reason why economic activity takes place. The people who take part in production are also consumers, the sum of whose individual demands provides a business person with the incentive to undertake action.

Capital is a man-made resource. Any product of labour and land which is reserved for use in the further production is capital.

Capital was created when people began to make simple tools to assist them in the production of food, the hunting of animals, and in the transportation of their possessions.

Entrepreneurship is also sometimes considered a factor of production. Land, labour, and capital will not produce anything. There must be some person or persons who will organize these three factors so that production takes place. Someone must take the decisions what, how, and where to produce. Whoever takes the decisions and the risks is known as an entrepreneur.

Organisation, management and risk-bearing – these are the entrepreneurial functions. In a one-person business, they are all carried out by the sole-proprietor. In a large company, the functions are shared.

Remember!

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