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Elastic and Inelastic DemandElasticity typically falls as we move down the demand curve, an important dividing line occurs at the demand elasticity of - 1. Demand is elastic if the price elasticity is more negative than -1. Demand is inelastic if the price elasticity lies between -1 and 0. If the demand elasticity is exactly -1, we say that demand is unit-elastic. A cut in prices raises revenue from football ticket sales if demand for football tickets is elastic but lowers revenue if demand is inelastic. Whether or not demand is elastic is the key piece of information required in setting the price of football tickets in this example. Although the price elasticity of demand typically changes as we move along demand curves, economists frequently talk of goods with high or low demand elasticities. For example, they will say that the demand for oil is price-inelastic (pricechanges have only a small effect on quantity demanded) but the demand for foreign holidays is price-elastic (price changes have a large effect on quantity demanded). Such statements refer to parts of the demand curve corresponding to prices (adjusted for inflation) that are typically charged for these goods and services. They do not necessarily describe the demand elasticity at points on the demand curve corresponding to real prices, which have never been observed historically. What determines whether the price elasticity of demand for a good is high (say, -5) or low (say, -0,5)? Ultimately, the answer must be sought in consumer tastes. If it is considered socially essential to own a television, higher television prices may have little effect on quantity demanded. If televisions are considered a frivolous luxury, the demand elasticity will be much higher. Psychologists and sociologists may be able to explain more fully than economists why tastes are as they are. Nevertheless, as economists, we can identify some considerations likely to affect consumer responses to changes in the price of a good. The most important consideration is the ease with which consumers can substitute another good that fulfils approximately the same function. Consider two extreme cases.Suppose first that the price of all cigarettes is raised 1 per cent, perhaps because the cigarette tax has been raised. Do you expect the Quantity of cigarettes demanded to fall by 5 per cent or by 0,5 per cent? Probably thelatter. People who can easily quit smokinghave already done so. A few smokers may try to cut down but this effect is unlikely to be large, In contrast, suppose the price of one particular brand of cigarettesis increased by 1 per cent, all other brand prices remaining unchanged. We should now expect a much larger quantity response from buyers. With so many other brands available at unchanged prices, consume is will switch away from the more expensive brand to other brands that basically fulfill the same function of nicotine provision. For a particular cigarette brand the demand elasticity could be quite high. Ease of substitution implies a high demand elasticity for a particular good. In fact this example suggests a general rule. The more narrowly we definea commodity (a particular brand of cigarette rather than cigarettes in general or oil rather than energy as a whole), the larger will be the price elasticity of demand. The demand for general categories of basic commodities, such as fuel, food or even household durable goods, is inelastic. As a category,only services such as haircuts,the theatre, and sauna baths, have an elastic demand. Households simply do not have much scope to alter the broadpattern of their purchases.
Language 1. Practice reading the following words correctly. If necessary, use a dictionary. Quantity, luxury, psychologist, energy, fuel, durable, whereas, linkage, boundary, percentage, consequently, merchandise, insurance. 2.Study the use of italicized words in different phrases and give their Russian equivalents. market: active ~; bear ~; black -; bond -; bull -; capital-; commodity~; exchange; - external-; financial-; forward ~; futures -; international-; job-, labour-; loan-; merchandise-; money-; option-; over-the-counter-; primary -; real estate ~; secondary-; securities-; spot-, stock-; world~. TRADE:barter ~; cash ~; external-; fair ~; foreign -; home -; illicit -; intermediate -; internal -; retail -; wholesale ~; to promote ~; to restrict -. TRADER: floor ~; petty -; pit ~. 3.Reproduce the context the following words used in texts 1 - 2. Visible exports; GNP; balance of payment; balance of trade; importer; deficit; terms of delivery; individual economies; foreign subsidiaries; investment capital; liquidated debts; the flow of merchandise; international transaction; capital account; current account. 4. Match the verbs from column A with the nouns from column В. A B
5. Read the words given in the box. Be sure you know the meaning of each word. Insert them in the blanks.
1. The profits made on a product vary according to the …… of sales and there is not normally a fixed profit …… on the unit price. 2. If you buy something by mail order it's normal to pay CWO(…… ), rather than COD (……). 3. The …… price of this product at the …… (i.e. in the shops ) – about 60% more than the. …… price. 4. As we have been carrying out a(an). …… control, there is a …… in processing orders. We apologize for any inconvenience caused by this…… 5. As part of the consignment is very urgent, we'll be making a……of two of the twenty…… you have ordered. 6. The only supply…… one products of…… quality. Very…… consignments are shipped by sea. There is no …… for small orders. 7.They submitted a…… in…… , in accordance with our instructions, but it arrived after the…… . 8. Because of the hundreds of thousands of contracts for regular …… that are concluded internationally in the course of a year, most traders use one or other of the standard sets of contract. 9. The difference between what a country receives for its visible exports and what it pays for its visible imports is its……. 10. By using a…… (also known as a documentary credit) both parties have a considerable degree of security in the commercial contract because it is honoured through the banking system. 11. The more narrowly we define a commodity (a particular brand of cigarette rather than cigarettes in general or oil rather than energy as a whole), the larger will be the …… of demand. 6.Match the beginning with the suitable ending. 1. Many import or export deals are arranged through an exporter's agent or distributor abroad. In this case 2. Alternatively, the deal may be arranged through an importer's buying agent or a buying house acting for the importer, 3. During the last two decades, while world output has been growing about 4% per year, 4. As nations engage in world trade, some of them end up with a favourable balance of trade, in which exports exceed imports, 5. A developing nation, lacking aid and investment capital, must finance imports by 6. Although the flow of merchandise constitutes a major category on international transactions, 7. Most transactions in the current account involve the purchase and sale of goods and services: 8. Any international transaction that provides a claim for payment from another country is entered as 9. A debit is recorded whenever a transaction gives rise to a claim by foreign countries for 10. The capital account depicts the flow of capital investments between nations: 11. Care must be taken in negotiating contracts for the purchase of raw materials and products, and the importing company should, 12. Because of the hundreds of thousands of contracts for regular merchandise that are concluded internationally in the course of a year, 13. Although the price elasticity of demand typically changes as we move along demand curves, 14. The more narrowly we define a commodity (a particular brand of cigarette rather than cigarettes in general or oil rather than energy as a whole),
a. it constitutes only part of a nation's balance of payments. b. or through an export house based in the exporter's country. c. a credit in the balance of payments of a given country and recorded with a + sign. d.. most traders use one or other of the standard sets of contract conditions that have been proved and tested for that purpose. e. payment from a given country, and designated by a -sign. f. and others have an unfavorable balance of trade, in which imports exceed exports. g.. the importer buys from a company in his own country and this company imports the goods. h the purchase and sale of physical assets and financial assets. i. economists frequently talk of goods with high or low demand elasticity. j. world trade has been growing about 8% and production by foreign subsidiaries has been growing by some 10%. k. whenever possible, take legal advice before signing an agreement. l. the larger will be the price elasticity of demand. m. income from merchandise trade and income generated from services performed. by one country for another. n. diverting sufficient quantities of natural resources and agricultural commodities. from domestic to foreign (export) uses. 7. Complete the sentences. (see Texts 1-2) 1. The world economy is increasingly becoming a single.... 2. Goods bought from abroad, such as food, cars, machines, medicines, books and many others, are called ... 3. Goods sold abroad are called ... 4. Services, such as insurance, freight are called … 5. The total amount of money a country makes including money from visible and invisible exports, for a certain period of time, usually for a year, is ... 5. The difference between a country's total earnings or GNP, and its total expenditure is called its ... 6. The difference between what a country receives for its visible exports and what it pays for its visible imports is its... 7. Many export or import deals are arranged…. 8. If a country sells more goods than it buys, it will have a ... 9. If a country buys more than it sells, it will have a ... 10. Prices for exports may be quoted in the buyer's currency, the seller's currency or… 11. An import/export transaction usually requires… 12. Developing nations are generally… 8. Fill the gaps in these sentences with a suitable word + preposition.
1 I'll be _____ you when I'm next in town. 2 If you suffer any loss, we will _______ you _______ that. 3 He was unable to._____ the extra work and became ill. 4 I'm afraid I can't.________ another department's work. 5 As you appear to have been overcharged, we will _________ your account _____ the sum of ¥600,000. 6 It is important to _____ any special Customs regulations. 7 All members of a team must ____ each other. 8 We've been ____ our partners in the USA for several years. 9 Due to falling sales, the company has ______ its, R & D programme. 10 They're __________ doing a much better job than that. 11 The cargo _____ four one-ton crates. 12 She couldn't _____ them ______ the need to redesign the product. 9.Fill in the gaps with the words and expressions from the text 5. 1. Demand is _______ if the price elasticity is more negative than -1. 2. Demand is _______ if the price elasticity lies between -1 and 0. 3. If the demand elasticity is exactly -1, we say that demand is ______.4. Whether or not demand is elastic is ______ required in setting the price. 5. Economists will say that the demand for oil is the demand for foreign holidays is ______ . 6. The answer must _______ in consumer tastes. 7. If televisions are considered _________, the demand elasticity will be much higher. 8. As economists, we can ________ some considerations likely to affect consumer in the price of a good. 9. The most important consideration is the ease with which consumers can_____ another good that_______ approximately the same function. 10. Consider two ______ cases. 11. With so many other brands _____ at unchanged prices, consumers will switch away from the more expensive brand to other ______ that basically fulfil the same _____. 12. _____ implies a high demand elasticity for a particular good. .13. Households simply do not have much scope _____ the broad pattern of their purchases. 10.Give English equivalents to the following words and word combinations. Внутриотраслевая торговля; внутрифирменная торговля; внутрифирменное разделение труда; сбалансированный торговый баланс, платежный баланс; продажа, сбыт; дочернее предприятие; ресурсосберегающие технологии; контракт на управление производством; переводить деньги; дебет и кредит; рынок с тенденцией к снижению курсов; рынок с тенденцией к повышению курсов; товарная биржа; внутренний рынок; внебиржевой рынок; рынок ценных, бумаг; торговля за наличные; торговля на основе взаимной выгоды; контрабандная торговля; розничная торговля; ограничивать торговлю; повышать/понижать доходы от...; устанавливать цену; в конечном счете, выполнять приблизительно ту же функцию; упасть на...%; основные товары (товары первой необходимости); хозяйственные товары длительного пользования; спрос на некоторые товары. 11.Read the passage, put the verbs in brackets into the correct tense form. Sum up what the text says about Britain's visible imports, its visible and invisible exports. Foreign trade of the UK In the 19th century Britain (to dominate) international trade, accounting for about one-third of world's exports. Early in the 20th century its position (to change). The volume of world's exports (to increase) but the percentage of British exports in world trade (to decline) significantly. But still foreign trade (to be) vital to Britain's livelihood. With a large population, small land area, and few natural resources, the country must depend on foreign trade to supply the raw materials for English factories and to provide a market for the sale of the thousands of types of manufactured goods produced by English industries. The United Kingdom's principal exports ( to be) vehicles, machinery, manufactured goods and textiles. Her main exports are foodstuffs and most of the raw materials for industry. Britain imports half the food it needs. There is usually an unfavorable balance of trade, that is, imports ( to exceed) exports, but this (to compensate) for in part by the so-called invisible trade. The earnings from invisible trade come in the way of shipping charges, interest payments from foreign investments, interest payments from British enterprises abroad, and tourist expenditure. The earnings from foreign tourist trade (to make) this one of Britain’s important industries. 12.Choose the right modal verb. 1. Helen (can't have stolen, must have stolen) the money from the office. She didn't come in to the office the day it was stolen. 2.It (can't, must, will) be a star, it's too bright. Perhaps it's an alien spaceship! 3.Helen (had to, must) leave the meeting early because she had a train to catch. 4.Things (shouldn't, couldn't, may, mustn't) have been worse -everything seemed to be going wrong.5..You (should, may, will) even have lost your job by then, who knows? 6.You (don't have to, mustn't) wear your seatbelt during the whole of the flight. 7.We (needn't have, couldn't have) ordered so much food as nobody was hungry. 8.(Would, Could) you mind passing me the salt? 9.He (may. must) know her address, but I'm not sure. 10.My friends (are, must, will) to arrive tomorrow. 11.You (shouldn't, needn't) have worried about it. He kept his promise. 12. I (might, had to) work overtime yesterday. 13.Decide whether the underlined words are used properly. Correct those which are wrong. 1. I waited nervous in the waiting-room before the interview. 2. Why were you so unfriendly when I saw you yesterday? 3. Tom's French is not very good but his German is almost fluent. 4. Eva lived in America for five years, so she speaks very well English. 5. Everybody at the party was very colourful dressed. 6. Ann likes wearing colourful clothes. 7. Sue is terrible upset about losing her job. 8. I tried hardly to remember his name but I couldn't. 9. The company's financial situation is not well at present. 10. Jack has started his own business. Everything is going quite good. 14.Change the sentences using Participle I and Participle II. 1.The scientists who will take part in the conference must submit their theses. 2. The Queen opens the Parliament with the speech that sets out the Government`s program for the future. 3.As he works for the local newspaper, he knew a lot about the town`s problems. 4.As he was very busy all the week, he could not answer the letters. 5.He fell silent and thus showed that the interview was over. 6.When you exchange ideal with other people, you enrich your mind 7.The speaker refused to continue. He was infuriated by the interruptions. 8.Though he was defeated, he remained a popular leader. 9.We changed the lines of our research. We were disappointed by the results. 15.Translate into English 
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