Text 3 (A) Utility and Prices

READING MATERIAL

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).

3. Обороты, равнозначные придаточным предложениям:

a) Объектный инфинитивный оборот (Complex Object)

b) Субъектный инфинитивный оборот (Complex Subject)

c) Самостоятельный (независимый) причастный оборот (Absolute Participial Construction).

4. Эмфатические конструкции.

5. Многозначность that (those), once, only, since.

После изучения всего указанного выше материала можно приступить к выполнению задания.

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.

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