Goods and markets

Pre-reading tasks

Task 1

Practice the reading of the following words:

inferior [ɪn'fɪərɪə] substitute ['sʌbstɪtju:t] preference ['prefrǝns] complement['kɒmplɪmənt] interval ['ɪntəvl]

vegetarian[̗vedʒə'teərɪən] association [ə̗səυsɪ'eɪʃn] wholesome ['həυlsǝm] necessity [nə'sesɪtɪ] sponge [spʌndʒ]

additional [ə'dɪʃǝnəl] luxury ['lʌkʃǝrɪ] significance [sɪɡ'nɪfɪkǝns] durability [̗djυərə'bɪlətɪ] perceive [pə'si:v]

Task 2

Make sure you can read these words correctly and say what words in the Russian language help you (to) guess their meaning:

product; radical; opposite; normal; factor; future; result; negative; positive; proportionally; constant; style; symbol; brand; elite; accessories; regional

Task 3

Give the initial forms of the following words:

tempted; held; prices; poorer; rises; less; falls; older; performed; grew; making; known; taken; slowly

Task 4

Learn to recognize the following international words:

hamburger; college; factor; complement; focus; interval; vegetarian; organic; collection; components; perfume; segment; chocolate; percent; company; information

Task 5

Read and translate the following words paying attention to the stress displacement:

product - production; symbol - symbolic; tempted - temptation; assume - assumption; probably - probability; public - publicity; sense - sensitivity; model - modeling; consider - consideration

Text A

GOODS AND MARKETS

Task 6

Read the text and be ready to do the exercises.

Increases in people's incomes raise consumption of most products. These products are called normal goods. There are some products, however, that people use less of as their income increases; these products are called inferior goods. Public transportation is an example--as people's incomes rise, they stop riding the bus and drive their own cars.

Prices of related goods also influence how much of a product people buy. Goods that are substitutes satisfy the same set of goals or preferences. An example of a substitute for hamburger is pork. The opposite of a substitute is a complement, a good that helps complete another in some way. Catsup and hamburger buns are complements to hamburger, and if they are priced low enough, consumption of hamburger may rise. Sometimes goods are such good complements that they are sold together and we think of them as a single item. Left shoes and right shoes are an example.

Normal Good

For most items, having a higher income would result in you consuming more items. In other words, quantity demanded rises as incomes rise. There is a positive association between quantity demanded and income. This can also be said as having a positive income elasticity of demand.

Inferior Good

These goods are not of poorer quality than other goods, as is suggested by the adjective "inferior." Instead, they are simply goods that you consume less of if your income rises. There is a negative association between quantity demanded and income. This can also be said as having a negative income elasticity of demand.

Neither Normal Nor Inferior

There are some items that are not inferior goods. These are usually necessities that all people use. Luxury goods are said to have high income elasticity of demand: as people become wealthier, they will buy more and more of the luxury good.A luxury good may become a normal good or even an inferior good at different income levels, e.g. a wealthy person stops buying increasing numbers of luxury cars for his automobile collection to start collecting airplanes (at such an income level, the luxury car would become an inferior good).

Socioeconomic significance

Certain manufactured products attain the status of "luxury goods" due to their design, quality, durability or performance that are remarkably superior to the comparable substitutes. There are also goods that are perceived as luxurious by the public simply because they play a role of status symbols as such goods tend to signify the purchasing power of those who acquire them. These kinds of goods are the objects of a socio-economic phenomenon called conspicuous consumption. Luxury brands

A luxury brand or prestige brand is a brand for which a majority of its products are luxury goods. It may also include certain brands whose names are associated with luxury, high price, or high quality, though few, if any, of their goods are currently considered luxury goods.

Market trends

The three dominant trends in the global luxury goods market are globalization, consolidation, and diversification. Globalization is a result of the increased availability of these goods, additional luxury brands, and an increase in tourism. Consolidation involves the growth of big companies and ownership of brands across many segments of luxury products. In economics a necessity good is a type of normal good. Like any other normal good, when income rises, demand increases. But the increase for a necessity good is less than proportional to the rise in income. Necessity goods are goods that we can't live without and won't likely cut back on even when times are tough, for example food, power, water and gas.

Most necessity goods are usually produced by a public utility. Stocks of private companies producing necessity goods are known as defensive stock. Defensive stock is stock that provides a constant dividend and stable earnings regardless of the state of the overall stock market.

Difference Between Necessities and Luxury

With the development of Science and Technology, many of our comforts have become our necessities. Earlier when the computer was invented, it was used only for the purpose of data storage and calculus. However today it has become our prime necessity. Digital cameras were once considered as a luxury, at least in the third world countries, but now, we no longer see those old cameras instead we see digital cameras, because of many of their advantages

Who knows what may seem today as a luxury invention may become an important part of our life tomorrow.

Task 7

Choose the correct preposition

1. You'll be working ______ our other office.

a) over

b) out of

c) at

2. We're the world's leading supplier _____ mangos.

a) with

b) in

c) of

3. You'll never finish the report on time if you keep working _____ that speed!

a) on

b) at

c) in

4. We have to find a new supplier _____ May 1st.

a) before

b) to

c) by

5. Are we going to ship this cargo ____ air?

a) through

b) with

c) by

6. These types of products are usually exempt _____ taxes.

a) considering

b) in

c) from

7. ______ this treaty, companies are not allowed to engage in unfair trade practices.

a) In

b) Under

c) From

8. We have increased food imports _____ 20% in the last three years.

a) on

b) no preposition

c) by

9. This company is _____for sale .

a) between

b) up

c) no preposition

10. We made _____ $5,000,000 in profits last year.

a) about

b) around

c) by

11. We're focusing _____ long-term growth.

a) on

b) in

c) at

Task 8

Match a line in A with a line in B (as in the text)

A better quality poor luxury to satisfy to make to increase market single some interval of different income

B income leader item profit component time quality brand level preferences

Task 9

Match up the words which have a similar meaning

to signify to change to purchase level to retain to tempt value image brand 10. durability

height to sale cost to appeal to quality to represent lastingness reflection, appearance to hold j) to alter

Task 10

Give the Russian equivalents to the following:

less frequently; to satisfy the set of goals; a single unit; expectations about future; fall in demand;

durability of good; a subset of similar goods; to improve the basic functionality; to display wealth; conspicuous consumption; primary examples; due to the difficulty of; quality changes

Task 11

Form the necessary parts of speech

VERB	NOUN		NOUN	ADJECTIVE
consume move tempt --- suggest mean --- perform enter grow	---- --- --- thought --- --- collection --- --- ---		--- --- --- value wealth purpose luxury profit proportion ---	high difficult necessary --- --- --- --- --- --- durable

Task 12

Form the new words by using the following suffixes and prefixes:

-tion; -ment; -er; -ship;-ly; -ance; im-; re-; dis-; -al

perform; tight; consume; relation; general; move; complete; current’ play; addition; transport

Task 13

Read and translate the following sentences paying attention to the meaning of the words and word combinations given below:

a) single - один, одинокий, единственный, холостой, незамужняя

to single - отбирать , выбирать

1. Bedroom 3 has a single bed with a pull-out bed for an extra person

2. It is a truth universally acknowledged, that a single man in possession of a good fortune, must be in want of a wife. (Austen,Jane)

3. We singled her out from the list of applicants.

4. The spider hung on a single thread

5. He was singled out to receive special thanks for his help.

6. Every single child will receive a gift.

b) to afford - позволить себе, давать возможность, предоставить, быть в состоянии

1. It is the good fortune of the affluent country that the opportunity cost of economic discussion is low and hence it can afford all kinds.

2. The question is not whether we can afford to invest in every child; it is whether we can afford not to.

3. Our meeting afforded much interesting information".

4. The country can't afford another drought.

5. The transaction afforded him a good profit.

6. The records afford no explanation.

c) most - очень, самый наибольший, больше всего, большинство

the most - самый лучший (интересный и т.д.), большая часть чего-либо

1. The most I can hope for is a passing grade.

2. Most people like chocolate.

3. Most simply choose to ignore it.

4. Most want the best for their children.

5. The most this room will seat is 150.

6. Most everyone around here is related to everyone else.

d) due to - по причине, вследствие, из-за

1. The delay was due to electrical failure.

2. Rising unemployment due to the economic downturn is spreading.

3. The accident was due to the breaking of one of the blades of the propeller on the left side

4. The concert was canceled due to the rain.

e) rather - скорее, предпочтительнее, вовсе нет

1. I'd rather stay in all day than go out with them.

2. I'd like this one rather than the other one.

3. This melon is rather tasteless.

4. This melon is rather tasteless, especially compared to the one we had last time

5. The contrary is rather to be supposed.

6. Tutoring is provided by older students rather than teachers.

7. Rather than complain, you should try to make changes

Task 14

Translate into English

1. Большинство товаров относится к товарам высшей категории (нормальные товары) - автомобили, электротехника, недвижимость, новая одежда, высококачественные продукты питания и т.д. Спрос на эти товары изменяется в прямой зависимости от изменения денежного дохода.

2. Товары-заменители. Если продукты являются взаимозаменяемыми, то цена на один продукт и спрос на другой продукт находятся в прямой зависимости. Так, если выросли цены на воздушные перевозки, то это вызывает увеличение спроса на поездки железнодорожным транспортом.

3. Цена - сумма, которую следует уплатить при приобретении товара или услуги. Обычно цена имеет денежное выражение. В экономической теории взаимосвязь между ценой и стоимостью является предметом дискуссий.

4. По сути, цена является коэффициентом обмена конкретного товара на деньги. Величину соотношений при обмене товаров определяет их стоимость. Поэтому цена является стоимостью, выраженной в деньгах, или денежной стоимостью единицы товара. Это фундаментальная экономическая категория.

5. Специфической формой экономического блага является товар, т.е. благо, произведенное для обмена. В процессе хозяйственной деятельности человека производятся блага и услуги, удовлетворяющие определенные потребности людей. Если в произведенном продукте (услуге) нет необходимости, нет желающих его приобрести, для него не будет рынка сбыта и производитель не получит никакой выгоды от его производства. В итоге такой продукт производиться не будет.

6. Первоначально рынок действительно возник и определялся как какое-либо физическое место (городская или сельская базарная площадь), где совершались акты купли-продажи товаров. В таком понимании рынок существует и сегодня, однако его роль в современной экономике незначительна. По мере развития и углубления общественного разделения труда и специализации границы рынка расширялись, а вместе с ними изменялись его содержание и функции. Еще в прошлом веке P. Бapp писал, что экономисты “понимают под рынком не какое-то определенное место, где осуществляются продажи и покупки, а всю территорию, части которой связаны отношениями свободной торговли таким образом, что цены быстро и легко выравниваются”.

7. В широком смысле слова ценные бумаги – это особым образом оформленные документы, выражающие имущественные (долговые) обязательства. В настоящее время на смену этим биржам приходят межбанковские телекоммуникации (типа SWIFT).

8. Тренд – это просто общее направление, по которому движутся цены - ВВЕРХ, ВНИЗ ИЛИ ПРЯМО. Направление тренда является весьма важным для торговли и анализа рынка. На валютном рынке существует возможность получить пользу от движений ВВЕРХ и ВНИЗ, так как покупка и продажа одной валюты всегда связана с другой валютой. Например, ПОКУПКА долларов США и ПРОДАЖА японских иен.

9. Товар-заменитель - товар, который удовлетворяет те функциональные потребности, которые призван выполнять основной товар (например, зубная паста товар-заменитель для зубного порошка). Товары-субституты обладают однородными потребительными свойствами, способные заменить друг друга при удовлетворении какой-либо потребности. Они конкурируют на рынке, и рост цены одного приводит к относительному снижению цены др.. Например, рост цены на масло заставляет потребителей покупать больше маргарина, и наоборот. Степень взаимозаменяемости товаров характеризуется коэффициентом перекрестной эластичности спроса, имеющим положительное значение. Чем оно больше (чем большее количество одного товара варьирует в прямой зависимости от изменения цены др.), тем больше степень заменяемости этих товаров. Перекрестная эластичность спроса между конкурирующими товарами, такими, например, как "пепси-кола" и "кока-кола", очень высока. Поэтому увеличение цены одного из напитков ведет к резкому увеличению потребления второго, цена которого остается неизменной.

10. Товары-комлименты (комплементарные).Товары, способные удовлетворять потребность только при совместном употреблении, например автомобиль и топливо, фотоаппарат и пленка и т.п. Для рынка таких товаров характерна обратная зависимость между ценой на один из них и спросом на др. Так, рост цены фотоаппаратов приводит к уменьшению количества покупаемой фотопленки.

Task 15

Answer the following questions:

1. What is goods?

2. What are the types of goods?

3. What is the function of price?

4. What are the factors influencing the purchasing of products?

5. Are inferior goods of poorer quality?

6. What goods do people prefer to buy: normal goods or inferior goods?

7. Is a luxury good an inferior good or a normal good?

8. How do different types of goods affect the status symbols?

9. What does the market luxury segment include?

10. In what case can we speak about luxuries as services?

11.Does the price depend on quality or quantity? Or both? Prove it.

Text B

MORE ABOUT DEMAND, WAGES AND INCOME

Task 16

Read the text to yourself and be ready for a comprehension check-up

The most obvious cost a person bears in buying a product is the price of the product. Price reflects cost because people have a limited amount of funds that they can spend, and if they spend their money on one thing, they cannot spend it on another. When the price of a product goes up, the amount of other things that a person must give up in order to buy the product rises. The amount of income a person receives affects the cost of buying an item because it determines which options a person must give up when buying a product.

REAL PRICES

Real prices and ideal prices refers to a distinction between actual prices paid for products, services, assets and labor, and computed prices which are not actually charged or paid in market trade. Ideal prices, expressed in money units, can be estimated, theorized or imputed for accounting or calculation purposes. They can nevertheless influence economic behavior. Examples of ideal prices

An example of an ideal price would be the value of annual Gross Domestic Product. This aggregate price is an ideal price, derived through an accounting procedure from statistical observations of actual prices charged and paid. Included in this ideal aggregate price there are many estimated and imputed prices reflecting the assumed monetary value of products and services.

Actual and potential prices

When goods are produced for sale, they may be priced, but those prices are initially only potential prices. There may not be any certainty about whether they will all fetch exactly those prices when they are actually sold, or whether they will be sold at all.

The number of ideal prices used for calculations in the world vastly exceeds the number of real prices. At any time, most economic goods and services in society are being owned or used, but not traded; nevertheless people are constantly extrapolating prices which would apply if they were traded in markets or if they had to be replaced.

The use of ideal prices for the purpose of accounting, estimation and theorizing has become so habitual and ingrained in modern society, that they are frequently confused with the real prices actually realized in trade. Thus, prices may be viewed only as a kind of data, information, or a type of knowledge.

REAL INCOME

Real income is the income of individuals or nations after adjusting for inflation. It is calculated by subtracting inflation from the nominal income. Real variables, such as real income, real GDP, and real interest rate are variables that are measured in physical units, while nominal variables such as nominal income, nominal GDP, and nominal interest rate are measured in monetary units. Therefore, real income is a more useful indicator of well-being, since it is based on the amount of goods and services that can be purchased with the income

REAL WAGES

The term real wages refers to wages that have been adjusted for inflation. This term is used in contrast to nominal wages or unadjusted wages.

The use of adjusted figures is in undertaking some form of economic analysis. For example, in order to report on the relative economic successes of two nations, real wage figures are much more useful than nominal figures.

year, inflation has to be taken into account — and thus using real wages as the measuring stick.

Real wages are a useful economic measure, as opposed to nominal wages, which simply show the monetary value of wages in that year.

Task 17

Copy out the dominant noun/verb/adjective for each part and find the words associated with them in meaning.

Task 18

Translate the sentences beginning with there is/are

Task 19

Skim through each paragraph and reveal the idea of the title.

Task 20

Copy out the topic sentence in each paragraph

Task 21

Single out the main facts characterizing price

Task22

Recognize the difference(s) between fact(s) and opinion in the text

Task 23

Mention reasons to use ideal price(s)

Task 24

Single out the main facts from the text and present them in a short essay.

Task 25

Answer the questions:

1. What does price reflect?

2. What happens when the price of a product goes up?

3. What’s the difference between real and ideal price?

4. How does the price influence the market?

5. What is the connection between price and demand?

6. What is a price negotiation?

7. Does real income exist?

8. How is real income measured?

9. Why is real income an indication of well-being?

10. What’s the difference between real wages and nominal wages?

11. What does the term real wage mean?

12. How does inflation influence real wages?

Task 26

Make a plan to retell the text.

Task 27

Write a brief summary of the text. Use the following key-patterns:

1. The article deals with…	а) Эта статья касается…
2. As the title implies the article describes…	b) Согласно названию, в статье описывается
3. It is spoken in detail....	c). Подробно описывается…
4 .The text gives valuable information about	d). В тексте дается информация о…
5. Much attention is given to....	e) Большое внимание уделяется…
6. The article is of great help to...	f). Эта статья поможет……

Task 28

Points for discussion

1. How do you understand the phrase:”We succeed by exceeding our customer’s expectations”?

2. Why is it important not to lose control of pricing?

3. Why do customers pay so much attention to the label?

4. Comment the following:”Quality is remembered long after the price is forgotten”. (Gucci slogan)