The Leisure Industry

Elasticity is a planning tool for managers. Let us take the leisure industry (1) ………….... When looking at the leisure industry, one would expect people with larger incomes to spend the most on goods and services, and this is indeed the case. (2) …………., when considering income elasticity we are interested not so much in the amount consumers spend as the percentage they spend. This will tell us if an increase in general levels of income will have a market effect on leisure spending.

(3) ………… surprisingly, the percentage spent on leisure product is fairly constant across the whole income range. Taking all leisure goods, ranging from sports equipment, televisions and videos to books and newspapers, the 10% of the population with lowest income spend around 4.5 % of their income on such products, (4) …………. the highest 10% of earners spend around 5.5%. These figures have been fairly constant for many years.

(5) ……………, leisure services, such as the cinema, concert and holidays, show a market difference. The lowest 10% of earners spend around 8% of their income, while the highest earners spend almost 15% of their income here.

(6) ………… the implications for firms in the leisure industry are fairly clear. If there is a general rise in the level of incomes, there will be a relatively constant rise in the sale of leisure goods, (7) ……………. at the same time there will be a larger rise in the sale of leisure services. (8) ………, if the economy is facing a recession, then the leisure services market is likely to face a greater fall in demand than the leisure goods industry.

TRANSLATION

A. Translate from English into Russian.

Besides price elasticity of demand the following types of elasticity are particularly useful in a business context:

Income elasticity of demand – the impact a change in income has on the quantity demanded.

Advertising elasticity of demand – the impact a change in the amount spent on advertising has on the quantity demanded, in other words it is the responsiveness of demand to advertising spending.

Cross elasticity of demand – the impact a change in price of one product has on the quantity demanded of a second product.

Elasticity is a planning tool for managers. It allows firms to ask ‘what if’ questions about their products, prices, advertising level and so on. What will happen to our sales if we increase price by 10 p, or if we increase our advertising costs by 5%?

There are, of course, other factors that affect demand. Schweppes has calculated the effect of changes in temperature on sales of its soft drinks – in principle this would give temperature elasticity of demand. Economists also use the terms of elasticity of expectations, elasticity of substitution, elasticity of technical substitution, point elasticity and others.

B. Translate from Russian into English.

Основными элементами рыночного механизма являются спрос, предложение, цена и конкуренция. Спрос – это форма выражения потребности. Объем спроса или количество товаров определяется такими факторами как цена товара или услуги, доходы потребителей, вкусы покупателей, общее число покупателей данного товара и др.

Одним из важнейших факторов, определяющих величину спроса, является цена товара или услуги. Максимальная цена, за которую покупатели готовы купить единицу товара в данный момент, есть цена спроса. Существует обратная связь между ценой и величиной спроса.

Предложение – это количество товаров или услуг, которые предложены для реализации на рынке в определенный промежуток времени. Объем предложения зависит, прежде всего, от цены. Чем выше цена товара, тем прибыльнее его производство.