Elasticity of supply and demand

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.

People very seldom have everything they want. Usually we have to decide carefully how we spend out income. When we exercise our choice, we do so 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.). They may all seem important but their true importance can be measured by deciding which we are prepared to live without. Our decisions indicate our scale of preferences and therefore our priorities.

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.

Variant 13

Task 1. Translate the text “Monopolies”

Task 2. Translate the words into English:

- interaction

- to make decisions

- levels

- to sell

- the quantity

- delivery goods

- middle management

- customer

Task 3. Put at least five questions to the given text in the Task 1.

Task 4. Open the brackets using Present Continuous or в Present Simple.:

1. Look at the sky: the clouds (to move) slowly, the sun (to appear) from behind the clouds, it (to get) warmer.

2. How is your brother? -- He is not well yet, but his health (to improve) day after day.

3. Listen! Who (to play) the piano in the next room?

4. The children (to eat) soup now?

5. The children (not to eat) soup now.

Task 5. To make up at least three sentences using the words from the Task 2.

Monopolies

Although in a perfect market competition is unrestricted and sellers are numerous, free competition and large numbers of sellers are not always available in the real world. 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 a variety of different causes. It is possible to distinguish in practice four kinds of monopoly.

State planning and central control of the economy often mean that a state government has the monopoly of important goods and services. Some countries have state monopolies in basic commodities like steel and transport, while other countries have monopolies in such comparatively unimportant commodities as matches. Most national authorities monopolise the postal services within their borders.

A different kind of monopoly arises when a country, through geographical and geological circumstances, has control over major natural resources or important services, as for example with Canadian nickel and the Egyptian ownership of the Sues Canal. Such monopolies can be called natural monopolies.

They are very different from legal monopolies, where the law of a country permits certain producers, authors and inventors a full monopoly over the sale of their own products.

These three types of monopoly are distinct from the sole trading opportunities which take place because certain companies have obtained complete control over particular commodities. This action is often called “cornering the market” and is 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 undesirable monopolies.

Variant 14

Task 1. Translate the text “Inflation”

Task 2. Translate the words into English:

- business plan

- on a business trip

- dependent

- interruption

- to obtain

- site

- prospective owners

- requirements

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