Ex. 16 . Multiple choice: In the space provided, write the letter of the item that best

     completes the statement.

____ 1. Which statement is an example of an economic law?

                  a) The speed limit is 55 miles per hour.

                  b) A triangle has 180 degrees.

                  c) People buy less at higher prices than at lower prices.

                      

 

____ 2. Which statement is true?

a) Demand is more important then supply in determining prices.

b) The demand curve slopes upward to the right.

c) More items will be sold at a lower price than at a higher price.

d) Congress passed the law of demand.

 

____ 3. When demand for lumber (пиломатериалы) increases, so does demand for nails

           (гвозди). When demand for lumber decreases, there is a decrease in demand for nails.

           Economists would say lumber and nails are

a) unrelated goods.

b) substitute goods.

c) complementary goods (complements).

d) elastic goods.

 

____ 4. The fifth ice cream is less enjoyable than the first. This is an example of

a) opportunity cost.

b) the law of demand.

c) diminishing marginal utility.

d) scarcity. 

 

____ 5. The law of supply states

a) buyers will purchase more at lower prices than at higher prices.

b) sellers will produce more at higher prices and less at lower prices.

c) quantities offered for sale do not depend on price.

d) consumers buy more at high prices and less at lower prices.

 

____ 6. What will happen in a competitive market if the quantity supplied is greater

           than the quantity demanded?

a) consumers will demand more goods.

b) suppliers will increase their output of goods.

c) the market price will go down.

d) the market price will go up.

 

____ 7. The price of each of the following was reduced by 20 per cent. Which would be

           likely to show the greatest increase in demand?

          a) bread                  с) restaurant meals

b) milk                   d) eyeglasses

____ 8. All else remaining equal, an increase in demand will result in

a) a higher market price.

b) a lower market price

c) no change in price.

d) an increase in supply.

 

Ex. 17. Find the false sentences and correct them using the information from the text.

1. To make a sale you need three parties: buyers, sellers and producers.

2. The lower price, the greater the incentive to produce and sell the product.

3. If it costs sellers less to produce their products, they will be able to offer more of them for sale.

4. Improvements in technology tend to increase the cost of production.

5. There are few producers that can make more than one product.

6. Equilibrium price and quality is the point at which the quantity demanded exactly equals the quantity supplied in a market.

7. Shifts in demand and supply don’t affect market price.

8. When the market is cleared it means that there can be either surpluses, or shortages in the market.

Ex. 18. Finish the following sentences.

1. The higher price …

2. At lower prices less …

3. It takes two parties …

4. If produces expect prices to increase in the future, …

5. Shifts in demand or supply …

6. A shortage exists in the market if …

7. When the market is cleared it means …

 

Ex. 19. Answer the questions.

1. What is supply?

2. Why do producers supply things?

3. What are the changes that can affect the quantities supplied?

4. What is the effect of changing in the technology on producing goods?

5. If producers expect prices to increase in future why do they increase their production now?

6. What is market equilibrium?

7. How do shifts in demand or supply affect market price?

8. When does a shortage exist in a market?

9. What does a surplus in a market imply (подразумевает)?

10. When are there no surpluses and shortages in a market?

QUESTIONS FOR DISCUSSION

1. What effect do consumers have on the economy when they increase or decrease the amount of their purchases?

2. Companies watch for changes in lifestyle of people having in mind (иметь в виду) that people today place value on doing things quickly and easily. Give examples of such goods.

3. The more goods producers sell in a market, the better off (богаче) are consumers.

4. Often shops reduse their prices at certain times of the year. Why do they do this?

5. The price of a product varies at different times and places. Using the law of supply and demand, explain the difference in prices between the paired goods.

 

a) Melons in January are more expensive than melons in July.

b) Bread baked this morning is more expensive than bread baked yesterday.

c) A can of cola on the beach is more expensive than a can of cola in the local supermarket.

d) Winter clothes on the store rack in November is more expensive than it is in March.

 

 

 

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