Text 3 (G) Markets and Monopolies

Второй год обучения

КОНТРОЛЬНОЕ ЗАДАНИЕ № 3

LABOUR, CAPITAL AND THE MARKET

Для того, чтобы правильно выполнить Задание №4, необходимо усвоить следующие разделы грамматики английского языка по любым учебникам:

1. Основные сведения о сослагательном наклонении(Subjunctive Mood). Условные предложения.

2. Сложные формы инфинитива (Infinitive) и причастия(Participle).

READING MATERIAL

Text 3 (A) Utility and Prices

Our basic needs are simple, but our additional individual wants are often very complex. Commodities of different kinds satisfy our wants in different ways. A banana, a bottle of medicine and a textbook satisfy very different wants. The banana cannot satisfy the same wants as the textbook.

This characteristic of satisfying a want is known in economics as its utility. Utility, however, should not be confused with usefulness. For example, a submarine may or may not be useful in time of peace, but it satisfies a want. Many nations want submarines. Economists say that utility determines "the relationship between a consumer and a commodity".

Utility varies between different people and between different nations. A vegetarian does not want meat, but may rate the utility of bananas very highly, while a meat-eater may prefer steak. A mountain-republic like Switzerland has little interest in submarines, while marine nations rate them highly.

Utility varies not only in relation to individual tastes and to geography,

but also in relation to time. In wartime, the utility of bombs is high, and the utility of pianos is low. Utility is therefore related to our decisions about priorities in production -particularly in a centrally planned economy. The production of pianos falls sharply in wartime.

The utility of a commodity is also related to the quantity, which is available to the consumer. If paper is freely available, people will not be so interested in buying too much of it. If there is an excess of paper, the relative demand for paper will go down. We can say that the utility of a commodity therefore decreases as the consumer's stock of that commodity increases. A special relationship exists between goods and services on the one hand, and a consumer and his money, on the other. The consumer's desire for a commodity tends to diminish as he buys more units of that commodity. Economists call this tendency the Law of Diminishing Marginal Utility.*

NOTES: *the Law of Diminishing Utility - закон убывающей предельной полезности

Text 3 (В) Supply and Demand

Economists talk about the Law of Supply, in which a rise in prices tends to increase supply, while a fall in prices tends to reduce it. If prices rise for a particular commodity, the rise will of course encourage producers to make more.

On the other hand, if prices fall either locally or throughout the world, producers will reduce production. This can result in serious difficulties for many producers, and may cause them to go out of business completely. Over-production of any commodity can also create difficulties, because it can lead to a glut on the market, which may cause prices to fall sharply.

Changes in prices lead to changes in the quantity of a particular commodity, which is made available to consumers. In such instances supply is said to be "elastic ", because it can be increased or decreased rapidly in response to market prices.

Elasticity of supply, as a response to changes in price, is related to demand. Economists define "demand" as a consumer's desire or want, together with his willingness to pay for what he wants. We can say that demand is indicated by our willingness to offer money for particular goods or services. Money has no value in itself, but serves as a means of exchange between commodities, which do have a value to us.

Usually we have to decide carefully how to spend our income. We do it according to our personal scale of preferences. In this scale of preferences essential commodities come first (food, clothing, shelter, medical expenses etc.), then the kind of luxuries, which help us to be comfortable (telephone, special furniture, insurance etc.), and finally those non-essentials, which give us personal pleasure (holidays, parties, visits to theatres or concerts, chocolates etc.).

Elasticity of demand is a measure of the change in the quantity of a good, in response to demand. The change in demand results from a change in price. Demand is inelastic when a good is regarded as a basic necessity, but particularly elastic for non-essential commodities. Accordingly, we buy basic necessities even if the prices rise steeply, but we buy other things only when they are relatively cheap.

Text 3 (С) The Price System

The utility of a commodity is related to the Laws of Supply and Demand. When economists talk about a Law of Supply, they mean that a rise in prices tends to increase the supply of a commodity, while a fall in prices tends to reduce it.

When they talk about a Law of Demand, they mean that the fall in prices tends to increase the demand for a commodity, while a rise in prices tends to decrease the demand. In any economic situation, a consumer will decide to buy a commodity only in terms of its particular utility to him.

So changes in market prices lead to changes in the quantity of a particular commodity made available to consumers.

Equilibrium is a combination of price and quantity at which the quantity demanded and the quantity supplied are the same. Once equilibrium is achieved, there is no incentive for producers or consumers to move away from it. An equilibrium price changes only when demand or supply changes - i.e., when the determinants of demand or the determinants of supply change.

A price that is above the equilibrium price creates a surplus, because producers are willing and able to offer more for sale than buyers are willing and able to purchase.

A price that is below the equilibrium price leads to a shortage, because buyers are willing and able to purchase more than producers are willing and able to offer for sale.

When demand changes, price and quantity change in the same direction.

When supply changes, price and quantity change, but not in the same direction. When both demand and supply change, the direction of the change depends on the relative sizes of the changes in demand and supply.

Markets may not always be in equilibrium because price changes may be costly, buyers and sellers fix prices for long periods of time, or the government may regulate prices.

Text 3(E) Labour

Money is not only a means of exchange but is also a means of measuring the value of men's labour. In economic theory, "labour" is any work undertaken in return for a fixed payment. The work undertaken by a mother in caring for her children may be hard, but it receives no fixed payment. It is not therefore labour in the strict economic sense.

As a scientist, the economist is interested in measuring the services, which people render to each other. Although he is aware of the services, which people provide for no financial reward, he is not concerned with these services. He is interested essentially in services, which are measurable in terms of money payments for a fixed and/or regular nature. In economics, money is the standard by which the value of things is judged. This standard is an objective and scientific one.

Human labour produces both goods and services. The activities of a farm worker and a nurse are very different, but both are measurable in terms of payments received. Labour in this sense is not concerned with distinctions of social class, but simply with the payment of wages in return for work. The national labour force are those people who are available for work within the nation, i.e. the working population.

It should be noted that any person engaged in private business is self-employed and his activities are partly those of an employer and partly those of an employee. If however he employs an assistant, to whom he pays a fixed wage, his new employee provides labour in return for payment. The employer receives the surplus (large or small) from the whole business. This surplus is the reward of private enterprise and is known as profit.

Text 3(F) Capital

Labour is any work performed for an employer at a negotiated rate while profit is the surplus, which accumulates as a result of productive work. The employer obtains this surplus after he pays the necessary expense of his business and the wages of his employees. He may be required to share the surplus with others who have provided the capital with which he started his business.

Most businesses need capital in order to start productive work, and the capital pays for the accommodation, machinery and other items, which the business needs.

There is always an element of risk in providing capital and starting a business. The business may not be successful. The employees of the business do not bear this risk, but the employers and the providers of capital do bear it. If the business is successful, the risk has been justified and the invested capital earns part of the profits as a return on the investment.

The capital, which people provide to help new business, is an accumulation of previous surpluses on previous business activities. In this way the past is used to Finance the future. Such capital is accumulated by a deliberate policy of saving surpluses. This policy may be personal, or it may be collective. As such, it is common to many economic systems. A certain part of the profit is "ploughed back" into the system in order to create capital.

In general, capital can be defined as (1) a factor of production (for example, machinery or cash); (2) the assets possessed by a person, a company or a nation. Land, houses and shares in a business are capital. All railways, docks, airports and state funds of money are part of the nation's capital.

Text 3 (G) Markets and Monopolies

The term market, as used by economists, is an extension of the ancient idea of a market as a place where people gather to buy and sell goods. In those days part of a town was kept as a market, and people would travel long distances on special market-days in order to buy and sell various commodities. Today, markets such as the world sugar market, the gold market and the cotton market do not need to have any fixed geographical location. Such a market is simply a set of conditions permitting buyers and sellers to work together.

In a free market, competition takes place among sellers of the same commodity, and among those who wish to buy that commodity. Such competition influences the prices prevailing on the market. Prices fluctuate, and such fluctuations are affected by current supply and demand.

In a perfect market, communications are easy, buyers and sellers are numerous and competition is completely free. There can be only one price for any given commodity: the lowest price, which sellers will accept, and the highest, which consumers will pay. There are, however, no really perfect markets. It can be said that the price ruling in a market indicates the point where supply and demand meet.

In some markets there may only be one seller or a very limited number of sellers. Such a situation is called a monopoly, and may arise from many different causes. It is possible to distinguish in practice four kinds of monopoly: (a) state monopolies, (b) natural monopolies, (c) legal monopolies and (d) sole traders.

State, natural and legal monopolies are distinct from the sole trading which takes place because certain companies have obtained complete control over particular commodities. This action is often illegal in many countries. In the USA anti-trust laws operate to restrict such activities, while in Britain the Monopolies Commission examines all special arrangements and mergers, which might lead to understand monopolies.

ВАРИАНТ 1

Перепишите и письменно переведите следующие предложения, принимая во внимание, что инфинитив в функции определения и особенно Complex Object и Complex Subject часто соответствуют придаточным предложениям.

1. There is no time to be lost with the delivery. 2. The manufacturers expected their goods to be in great demand. 3. Basic human needs seem to be very simple, but individual wants may be very complex. 4. New brands were reported to have been sold well. 5. We believe our people to restore the level of economic development during the shortest time period. 6. Labour power is man's ability to work. 7. Though abolished in America slavery did not disappear.

2. Перепишите и письменно переведите данные ниже предложения, учитывая различия в переводе зависимого и независимого причастного оборотов

1. Launching your own business you should have initial capital. 2. New

business having been launched, they worked day and night. 3. A new Board of Directors was formed, with R. Brown being in charge of finance. 4. The contract having been signed, the partners shook hands. 5. In many underdeveloped countries people suffer most from the rising cost of living. 6. An economy manufacturing products for exchange is called a commodity economy. 7. The total sum of money received over a certain period (a year) is called the country's national income.

3. Перепишите и письменно переведите следующие предложения, учитывая разные возможности перевода герундия на русский язык.

1. They regretted having lost the cargo. 2. People buy essentials even if this means spending all their money. 3. Britain's industry was protected by prohibiting the colonies from producing certain goods. 4. In primitive times people lived for centuries without exploiting each other. 5. Anarchy in production prevails in a society of individual commodity producers as they all work without planning their production.

4. Перепишите и письменно переведите следующие предложения, содержащие причастия, герундий и инфинитив или конструкции с ними.

1. Any person engaged in private business is knownto be paid a fixed sum of money. 2. Everyone believes economy to be a rather difficult science. 3. We consider money to be a means of measuring the value of men's labour. 4. Human labour is supposed to produce both goods and services. 5. The activities of a farm worker and a nurse being very different, the payment received by the two should be different too. 6. The work having been finished in time, all the salesgirls got their salaries. 7. Many economists believe the wages to be the price of labour. 8. The report will be discussed at the conference to open in Moscow soon. 9. Known as simple commodity production, this sort of economy is based on private ownership. 10. Saving means not spending income on consumption. Simply leaving money in a current account or in a jar on the mantelpiece, as long as it represents non-spending of current income, is saving.

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