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A set of incentives excess demand are divided into purchasing a service increases the importance of equilibrium excess supply decreases the interaction of demanders and suppliers






 

1. Frequently product markets _______ two classes: goods and services.

2. When you have someone adjust a carburettor, however, you are _______.

3. _______ determines a market price and a market allocation of a particular commodity.

4. This interaction also creates _______ for subsequent decisions by both suppliers and demanders that may affect many markets.

5. _______ occurs when, at a particular market price, the quantity that suppliers want to provide to the market exceeds the quantity that demanders want to purchase.

6. _______ occurs when, at a particular market price, the quantity that suppliers want to provide to the market is less than the quantity that demanders want to purchase.

7. When there is excess demand, the relative price _______ and when there is excess supply the relative price _______.

8. _______ is that the equilibrium relative price is the only price at which the interests of demanders happen to coincide precisely with the interests of the suppliers.

 

IV. Read and translate the text:

A market is a set of transactions in which a particular kind of commodity is exchanged, and in which the transactions for this commodity among different individuals and firms are related.

There are markets for hundreds of thousands of things. Some of these things are tangible and satisfy individual desires, while others are intangible but also important in satisfying individual interests. These things are frequently referred to as products. Frequently, product markets are divided into two classes: goods and services. For example, a hamburger is a good, while a doctor's examination is a service. When you buy an automobile, you are purchasing a good. When you have someone adjust a carburettor, however, you are purchasing a service.

A good is something tangible that is produced, and consumed, often having been purchased in a market. A service is something intangible that is produced and consumed, also frequently having been purchased in a market.

Resources are things used to produce goods, services and capital. Some people come to a market because they want to buy (demanders), others come because they want to sell (suppliers). The interaction of demanders and suppliers determines a market price and a market allocation of a particular commodity. This interaction also creates a set of incentives for subsequent decisions by both suppliers and demanders that may affect many markets. To understand these incentives, as well as how market prices and allocations are determined, we need to understand how suppliers and demanders respond to different relative price and the quantity of a particular commodity that individuals or firms (suppliers) would be willing to provide to the market.

Demand is all combinations of relative price and the quantity of a particular commodity that individuals or firms (demanders) would be willing to purchase in a market.

A market is created when those who willingly supply a good, service, or resource exchange with those who desire to use, control, or consume a good, service, or resource.

Markets reallocate commodities from suppliers to demanders. What if suppliers want to provide more than demanders want to purchase? Or, what if demanders want more than suppliers are willing to provide?

Excess supply occurs when, at a particular market price, the quantity that suppliers want to provide to the market exceeds the quantity that demanders want to purchase.

Excess demand occurs when, at a particular market price, the quantity that suppliers want to provide to the market is less than the quantity that demanders want to purchase in an open or free market, the relative price for a commodity will generally decrease when there is excess supply; the relative price will generally increase when there is excess demand.

Excess demand will be eliminated if the relative price is free to increase.

Markets adjust in predictable ways if, when there is excess demand, the relative price increases and if, when there is excess supply, the relative price decreases. These changes in relative prices tend to eliminate the excess supply or excess demand.

A market is equilibrium when the quantity that suppliers are willing to provide to the market at a specific market price is exactly equal to the quantity that demanders desire to purchase in the market at the same market price.

The importance of equilibrium is that the equilibrium relative price is the only price at which the interests of demanders happen to coincide precisely with the interests of the suppliers. At any other relative price, the interests of suppliers and demanders do not coincide.

 

V. Answer the following questions:

1. What is a market?

2. What is a good?

3. What is a service?

4. Whom do we call demanders and suppliers?

5. What is supply?

6. What is demand?

7. What is excess supply?

8. What is excess demand?

9. When will excess demand and excess supply be eliminated?

10.What is the market equilibrium?

11.Why is market equilibrium important?

 

VI. Define the terms:

a good

a market

a supplier

allocation

excess demand

a transaction

a service

a demander

market

excess supply

equilibrium

resources

 

VII. Translate into English:

1. Розрізняють ринки товарів і ринки послуг. 2. Товар – це щось відчутне на дотик, що виробляється та споживається, часто те, що ми можемо придбати на ринку. 3. Послуга – це щось не відчутне на дотик, що виробляється та споживається, що ми також можемо придбати на ринку. 4. Ресурси – це те, що використовується для виготовлення товару та надання послуг. 5. Взаємодія споживачів і постачальників визначає ринкову ціну та розміщення ринку. 6. Пропозиція – це поєднання відносної ціни та кількості якогось товару, що його фірми або окремі особи бажають постачати на ринок. 7. Споживання – це поєднання відносної ціни та кількості якогось товару, що його фірми або окремі особи бажали б придбати на ринку. 8. Надмірна пропозиція складається тоді, коли кількість товару, яку постачальник хоче поставити на ринок з ринковою ціною, перевищує кількість, яку споживачі бажають придбати. 9. В умовах вільного ринку відносна ціна на товар буде падати при зростанні пропозиції та підніматися при зростанні попиту.

 

VIII. Read and dramatize the following dialogue:

A.: I say, Fred, you promised to tell me everything about markets.

B.: Yes, I do remember I promised to tell you.

A.: I am all ears.

B.: To begin with markets are as old as recorded civilization.

A.: If I've got you right, they existed in earlier times.

B.: That's right. In earlier times, they were primarily a physical location where people would gather periodically to exchange goods and services.

A.: So, going to market was an important economic and social activity.

B.: Indeed, it was so important that permanent market locations frequently developed into the towns and cities that now dot much of the landscape.

A.: Sure. And today we think less about markets as specific physical locations where exchanges occur than we do as institutional arrangements that tie exchanges together in some way.

В.: І think that any particular transaction occurs in a specific place, of course, but tens of thousands of such transactions scattered across a community or even a nation may constitute a market for a particular thing.

A.: Yes. And if there is a market, a person can expect that the nature of the transaction will be similar in different locations.

B.: What do you mean by this?

A.: For example, we speak of the housing market in a city or the rental market in a city, even though there is no central location where houses are bought and sold or where apartments are offered for rent and rented. While there may be local peculiarities, buying a home in one part of a city is quite similar to buying a home in another part of a city.

B.: In this sense there is a market for housing in a city, or even across an economy. And, similarly, we may speak of the market for cereal, or soft drinks or shirts or jeans or computer software, even though cereal is sold in thousands of different locations throughout an economy.

A.: Thus, a market need not have a single physical location as long as transactions for a specific good or service or resource in one place are related in some way to the transactions for the good or service or resource in some other place.

B.: That's great. And in an important sense, however, a market is an idea. That is, a market is a way of thinking about the consequences of the many transactions that occur for specific goods, services, or resources.

 

IX. Make up your own dialogue using the following expressions:

exchange of goods and services transactions for commodity

to satisfy individual interests to purchase in a market

to determine a market price a market allocation

to provide to the market to consume a good

service or resource

 

X. Paraphrase the sentences as in the model:

Model: I am afraid that this firm will provide less quantity of the commodity to the market. I am afraid lest this firm provide less quantity of the commodity to the market.

1. I worry, because the relative price for a commodity will decrease. 2. The retailer is afraid that his goods will satisfy individual desires of only one group of consumers. 3. The producers are afraid that the retailers will provide inconvenient market location. 4. The producers are afraid that their market research is of no value to predict what the people will want. 5. The producers are afraid that marketing operations will be very expensive.

XI. Paraphrase the sentences as in the model:

Model: The manager demanded: «The wholesalers must simplify the process of distribution.» The manager demanded that the wholesalers simplify the process of distribution.

1. The wholesaler demanded: «We must determine a market price of a particular commodity.» 2. The manager ordered: «The interaction of demanders and suppliers must determine a market allocation of a particular commodity.» 3. The manager demanded: «The wholesalers must provide new channels of distribution which help to bring goods to the market.» 4. The middleman suggested: «Suppliers and demanders must respond to different relative prices to determine market allocations and prices.» 5. The producer suggested: «Markets must adjust in predictable ways.» 6. The producer suggests: «Changes in relative price must tend to eliminate the excess supply or excess demand.»

 

XII. Translate into English using Subjunctive I:

1.Виробники побоювалися, щоб ціни на цей вид товару не знизилися. 2. Необхідно, щоб ринкова ціна визначалася взаємодією суб'єктів попиту та пропозиції. 3. Важливо, щоб встановилася ринкова рівновага. 4. Виробники запропонували, щоб оптові торговці спростили процес збуту. 5. Необхідно, щоб виробники були готові постачати на ринок таку кількість товару, яку споживачі готові придбати. 6. Важливо, щоб інтереси споживачів збігалися з інтересами постачальників.

 

ХIIІ. Communicative situations:

1. Why does a market adjust toward equilibrium?

If markets did not adjust toward equilibrium, what behavior would you observe?

2. Do you suppose that a market ever reaches equilibrium?

3. If not, is the concept of equilibrium useful?

4. If a firm found that its market demand was inelastic and cut its production, would its revenues from supplying goods to the market increase or decrease?






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