Lilia Raitskaya Stuart Cochrane
macmillaMII
MACMILLAN
Student's Book
^Contents
Unit 1
Before you read 13
What does economics study? 14
What are 14
microeconomics and macroeconomics ? 14
Before you listen 17
Before you read 18
History of economic thought 19
Before you listen 22
Before you read 23
Econometrics 24
Before you listen 25
Before you read 26
The law of demand 26
Before you listen 27
Unit 32
Before you read 32
The traditional economy 32
Before you listen 33
Before you read 35
The market economy 35
Before you listen 36
The planned economy 38
Before you listen 43
Before you read 44
Before you listen 47
Revision Vocabulary Units 1 to 4 49
Before you read 51
Consumer choices 53
Before you listen 63
Before you read 65
Costs and supply 65
Before you listen 66
Unit 68
Before you read 68
Market structure and competition 68
Before you listen 69
Before you read 70
Monopolies 70
Unit 75
Before you read 75
The labour market 75
Before you listen 76
Before you read 77
Supply of labour 77
Before you listen 79
44Unit 81
45Before you read 81
70Factors of production 81
85Before you listen 83
Before you read 84
Division of labour 84
Before you listen 85
Revision Vocabulary Units 5 to 8 88
Before you read 88
Surplus 89
Before you listen 90
Before you read 92
Price discrimination 92
Before you listen 93
Welfare economics 95
Before you listen 96
Before you read 97
Government revenue and spending 97
Before you listen 98
Before you read 100
Wealth, income and inequality 101
Before you listen 103
Before you read 104
Poverty 105
Before you listen 109
Macroeconomics 112
Before you listen 113
Before you read 114
ф D Vocabulary 114
Aggregate demand and aggregate supply 114
BP E Comprehension 116
Before you listen 116
0 F Listening *))) 116
ff G Speaking 117
Task 117
Revision Vocabulary Units 9 to 12 119
Unit 120
Before you read 120
Money 120
^ В Comprehension 121
Before you listen 121
В с Listening Ц))) 121
Before you read 121
0 D Vocabulary 122
Banks 133
В E Comprehension 134
Before you listen 134
F Listening Ц))) 134
G Speaking 135
Unit 136
Before you read 136
ff A Vocabulary 136
Fiscal policy 136
P В Comprehension 137
Before you listen 137
С Listening 4))) 137
Before you read 138
0 D Vocabulary 138
Monetary policy 138
Before you listen 141
rehension 141
Before you read 144
A Vocabulary 144
Interest rates and the money market 144
В Comprehension 145
С Listening H))) 146
Before you read 147
fiJ D Vocabulary 147
Economic shocks 147
Before you listen 150
G Speaking 151
Before you read 152
fif A Vocabulary 152
Inflation 152
Before you listen 154
Before you read 156
ff D Vocabulary 156
Unemployment 156
Before you listen 157
F Listening H))) 157
E Comprehension 157
G Speaking 157
9 H Writing 158
Revision Vocabulary Units 13 to 16 159
Unit 160
Before you read 160
Economic growth 161
9 В Comprehension 163
Before you listen 163
ff С Listening Ц))) 164
Before you read 164
ff D Vocabulary 164
The business cycle 165
fi? E Comprehension 166
Before you listen 166
F Listening И))) 167
H Writing 167
Before you read 168
f A Vocabulary 168
The open economy 168
? В Comprehension 169
Before you listen 170
С Listening 4))) 171
Before you read 171
BP D Vocabulary 171
Exchange rates 172
0 E Comprehension 174
Before you listen 174
F Listening H))) 175
G Speaking 176
Task 176
Before you read 177
A Vocabulary 177
Exchange rate mechanisms 177
й В Comprehension 178
Before you listen 178
0 С Listening 4))) 178
Before you read 179
9 D Vocabulary 179
International trade 179
Before you listen 180
В F Listening 4))) 180
G Speaking 181
Task 181
Unit 182
Before you read 182
В A Vocabulary 182
Less developed countries 183
в В Comprehension 184
Before you listen 184
0 С Listening *))) 184
Before you read 184
В D Vocabulary 184
The Russian economy in the 19th century 185
fij E Comprehension 186
Before you listen 186
F Listening 4))) 186
Task 188
H Writing 188
A Vocabulary 188
в? В Comprehension 190
Before you listen 190
0 С Listening 4))) 190
Before you read 190
ff D Vocabulary 190
Russia's foreign trade 191
9 E Comprehension 192
Before you listen 192
Revision Vocabulary Units 17 to 21 194
Aggregate demand and aggregate supply.. 63
2 М л i m . 11 a '» G u ' d w tc E(ctomKt Сонеч'л
Дорогие друзья!
Представляем Вам учебно-методический комплект (УМК) «Macmillan Guide to Economics», цель которого - помочь Вам приобрести навыки владения английским языком в области экономики и познакомить Вас с основополагающими темами экономической теории.
Из курса Вы узнаете, что изучают экономическая теория и эконометрика, в чём разница между микроэкономикой и макроэкономикой, какие экономические системы существуют в современном мире, как функционирует рынок и какую роль на нём играют спрос и предложение, какими особенностями обладает рынок труда, какие факторы производства используются в экономике, а также о монополии, общественных благах, экономике благосостояния, экономической политике государства, деньгах, инфляции и банках, процентных ставках и финансовых рынках, циклах деловой активности и многом другом.
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J1.K. Раицкая Stuart Cochrane
Macmillan Guide to Economics Introdactton 3
Before you read
Discuss the following with your partner.
Do yo i know much about economics?
■+ Tick wluch of these statements you think are true.
-» Then explain to your partner why.
Before you read 13
What does economics study? 17
What are 18
microeconomics and macroeconomics ? 18
Before you listen 20
Before you read 22
History of economic thought 23
Before you listen 26
Before you read 27
Econometrics 28
Before you listen 29
Before you read 30
The law of demand 30
Before you listen 31
Unit 36
Before you read 36
The traditional economy 36
Before you listen 37
Before you read 39
The market economy 39
Before you listen 40
The planned economy 42
Before you listen 47
Before you read 48
Before you listen 51
Revision Vocabulary Units 1 to 4 53
Before you read 55
Consumer choices 57
Before you listen 67
Before you read 69
Costs and supply 69
Before you listen 70
Unit 72
Before you read 72
Market structure and competition 72
Before you listen 73
Before you read 74
Monopolies 74
Unit 79
Before you read 79
The labour market 79
Before you listen 80
Before you read 81
Supply of labour 81
Before you listen 83
44Unit 85
45Before you read 85
70Factors of production 85
85Before you listen 87
Before you read 88
Division of labour 88
Before you listen 89
Revision Vocabulary Units 5 to 8 92
Before you read 92
Surplus 93
Before you listen 94
Before you read 96
Price discrimination 96
Before you listen 97
Welfare economics 99
Before you listen 100
Before you read 101
Government revenue and spending 101
Before you listen 102
Before you read 104
Wealth, income and inequality 105
Before you listen 107
Before you read 108
Poverty 109
Before you listen 113
Macroeconomics 116
Before you listen 117
Before you read 118
ф D Vocabulary 118
Aggregate demand and aggregate supply 118
BP E Comprehension 120
Before you listen 120
0 F Listening *))) 120
ff G Speaking 121
Task 121
Revision Vocabulary Units 9 to 12 123
Unit 124
Before you read 124
Money 124
^ В Comprehension 125
Before you listen 125
В с Listening Ц))) 125
Before you read 125
0 D Vocabulary 126
Banks 141
В E Comprehension 142
Before you listen 142
F Listening Ц))) 142
G Speaking 143
Unit 144
Before you read 144
ff A Vocabulary 144
Fiscal policy 144
P В Comprehension 145
Before you listen 145
С Listening 4))) 145
Before you read 146
0 D Vocabulary 146
Monetary policy 146
Before you listen 149
rehension 149
Before you read 152
A Vocabulary 152
Interest rates and the money market 152
В Comprehension 153
С Listening H))) 154
Before you read 155
fiJ D Vocabulary 155
Economic shocks 155
Before you listen 158
G Speaking 159
Before you read 160
fif A Vocabulary 160
Inflation 160
Before you listen 162
Before you read 164
ff D Vocabulary 164
Unemployment 164
Before you listen 165
F Listening H))) 165
E Comprehension 165
G Speaking 165
9 H Writing 166
Revision Vocabulary Units 13 to 16 167
Unit 168
Before you read 168
Economic growth 169
9 В Comprehension 171
Before you listen 171
ff С Listening Ц))) 172
Before you read 172
ff D Vocabulary 172
The business cycle 173
fi? E Comprehension 174
Before you listen 174
F Listening И))) 175
H Writing 175
Before you read 176
f A Vocabulary 176
The open economy 176
? В Comprehension 177
Before you listen 178
С Listening 4))) 179
Before you read 179
BP D Vocabulary 179
Exchange rates 180
0 E Comprehension 182
Before you listen 182
F Listening H))) 183
G Speaking 184
Task 184
Before you read 185
A Vocabulary 185
Exchange rate mechanisms 185
й В Comprehension 186
Before you listen 186
0 С Listening 4))) 186
Before you read 187
9 D Vocabulary 187
International trade 187
Before you listen 188
В F Listening 4))) 188
G Speaking 189
Task 189
Unit 190
Before you read 190
В A Vocabulary 190
Less developed countries 191
в В Comprehension 192
Before you listen 192
0 С Listening *))) 192
Before you read 192
В D Vocabulary 192
The Russian economy in the 19th century 193
fij E Comprehension 194
Before you listen 194
F Listening 4))) 194
Task 196
H Writing 196
A Vocabulary 196
в? В Comprehension 198
Before you listen 198
0 С Listening 4))) 198
Before you read 198
ff D Vocabulary 198
Russia's foreign trade 199
9 E Comprehension 200
Before you listen 200
Revision Vocabulary Units 17 to 21 202
\ the people who control a country and make laws
information
company that sells goods or services
easiness
the amount of money you have for something
how much people want something
the number of people without work
something such as money, workers or minerals belonging to an organisation, country, etc which can be used to function properly
rising prices
A
Vocabulary
Match
the words with the. definitions.
budget
business
convenience
4
data demand
government
inflation
resources
trade-off
unemployment
H Reading 1
What does economics study?
What do you think ot when you hear the word
ниtniU's'r Money, certainly, ami perhaps more complicated things like business, inllation ami unemployment. The science of economies studies all of these, but many more tilings as well Perhaps you think that economies is all about the decisions that governments ami business managers take. In l'aet. economists study the decisions that we all take every day
Very simply, economics studies the way people deal with a tact ot life: resources are limited, but our di main! tor them certainly is not. Resources may be material things such as food, housing and heating There are some resources, though, that we cannot touch. Time, space and convenience, lor example, an also resources. Think ot a day Then, are only Л hours in one. and we have to choose the best way to spend them. Our everyday
4 Hi., Hi Guid» to Economic» Utit I
lives are full of decisions like these. Every decision we make is a trade-off.If you spend more time working, you make more money. However, you will have less time to relax. Economists study the trade-offs people make. They study the reasons for their decisions. They look at the effects those decisions have on our lives and our society.
What are
microeconomics and macroeconomics ?
Economists talk about microeconomicsand macroeconomics. Microeconomics deals with people, like you and me, and private businesses. It looks at the economic decisions people make every day. It examines how families manage their household budgets. Microeconomics also deals with companies - small or large - and how they run their business. Macroeconomics, on the other hand, looks at the economy of a country - and of the whole world. Any economist will tell you, though, that microeconomics and macroeconomics are closely related. All of our daily microeconomie decisions have an effect on the wider world around us.
Another way to look at the science of economics is to ask, 'what's it good for?' Economists don't all agree on the answer to this question. Some practise positiveeconomics. They study economic data and try7to explain the behaviour of the economy. They also try to guess economic changes before they happen. Others practisenormativeeconomies. They suggest how to improve the economy. Positive economists say, 'this is how it is'. Normative economists say, 4ve should ...
So what do economists do? Mainly, they do three things: collect data, create economic models and formulate theories. Data collection can include facts and figures about almost anything, from birth rates to coffee production. Economic models show relationships between these different data. For example, the relationship between the money people earn and unemployment. From this information, economists try to make theories which explain why the economy works the way it does.
В В Comprehension
Now read the text again and match each paragraph with the correct heading.
PARAGRAPH 1
PARAGRAPH 2
PARAGRAPH 3
PARAGRAPH 4
PARAGRAPH 5
A How economists work В Making deals every day С Various ideas about economics D Two areas of economics E Two types of economist
Before you listen
Discuss these questions with your partner.
If you live in a modern economy, life is quite easy.
Before the Industrial Revolution, life was much harder.
□ □ □ □ □ □
И С Listening И))]
Listen to someone talking about life before the Industrial Revolution.Which of these things are mentioned?
length of life
housing
illnesses
work
food
having children
М а с m i 11 a n Guide to
Economics Unic I
5
life expectancy A about 250
number of children who died
before they reached five years old В 1 in 10
5 number of women who died when they were giving birth С 25
4years since the Industrial Revolution D 1 in 3
Before you read
Discuss these questions with your partner.
Do you have any idea where the word economicscomes from?
Do you know the names of any famous economists from the past or anything about their ideas?
P D Vocabulary
Complete each sentence with a word or phrase from the box.
abundance concept consumer firm Industrial Revolution population precious metals production process profit raw materials satisfaction scarcity
The began in the late 18th century
when machines at ax ted to replace human workers.
Sand and limestone are the
needed to make glass.
The to make a car involves many
people and machines
The extra money a company makes is called
People want from the products
they buy.
is when there is very little
of something.
is when there is lots of something.
Gold and silver are examples of
Another word for idea is
The is the number oi people a
country has.
6
H* . • J • ' f . . n »
. ■ t
History of economic thought
Economic thought g<ies hack thousands of years. The ancient (ireek, Xcnophon. used the word iiikownniknn(from oikos. mcaiung,'fmu7v.household, estate,and nomos. for чтиц. lain.lit. was talking about skilful or clever ways to manage land and households. We could call main of Aristotle's political writings economic*although he diil not list (he won! The English word economies first appeared in the P'tii century - two and a halt thousand years after Xenophon
Early economic (bought was .ill about the meaning of wealth or being rich These early thinkers asked, 'what makes a stale or :» с .mm wealthy':' For nearly 2,<нюyears, the answer was very simple- gold. A country or nation's wealth depended on its owning precious met.ils This simple view of the economy remained tint medieval limes.
\
to make the state strong. For them, the nation's wealth depended on stocks of gold and the size of the population. More people meant bigger armies and a stronger state.
These were still simple ideas. However, daily experience had also taught people many basic economic concepts. For example, they understood the importance of trade with other states. They realised that scarcity makes things more expensive and abundance makes them cheaper.
Modern economics was really born in the 19th century. At this time, thinkers like Adam Smith wrote down ideas that are still important today. Adam Smith is often called the Father of Modern Economics,although the science was calledpolitical economythen. Smith realised that a nation's wealth depended on its ability to produce goods. The value of these goods depended on the cost of production. The cost of production depended on the cost of workers, raw materials and land. This was really the first example of macroeconomics.
Smith and other classical economists were writing at a time of great change. The industrial revolution had begun. Paper money began to replace precious metals. The middle classes were growing stronger. Economists' theories echoed these changes. They wrote about the division of labour (each worker taking their part in the production process). They discussed the problems of population growth. They influenced thinking about social classes.
For classical economists, the value of goods depends on the cost of production. However, the price of goods is not always the same as their real cost. Later economists developed new theories to explain this weaknessin classical economies. These are known as the neoclassicaleconomists and they were writing at the end of the 19th and early 20th centuries.
In neoclassical economics, supply and demand make the economy work. In other words, the price of goods depends on how much people want them and how easily they can be found. Consumers want satisfaction from their resources (time and money). Firms want profit. In neoclassical economics, this is the basic relationship in the economy. These ideas are still the basis of economic thinking today.
И E Comprehension
Now read the text again and decide whether these statements are true or false.
Aristotle did not use the word economics,but he did write about
economic ideas. T □ / F П
Early economists thought that a
nation without gold was poor. T П / F П
People in medieval times didn't understand anything about
economics. T □ / F D
In classical economics, the value of something was measured in gold. T П / F D
Economists later found a problem
with the classicalmodel. T □ / F □
In neoclassical economics, supply
and demand control price. T D/ F □
Before you listen
Look at this fact file about Adam Smith. Can you fill in any of the information?
Born in Scotland in (1)
Lost his father at the age of (2)
Kidnapped at the age ol (3)
Went to University of Glasgow at the age of
)
Went to Oxford University at the age of
)
Most famous book is The Wealth of
)
Influenced Karl Marx and the founding fathers of
Macmillan Guide to Economics
Unit I
7
H F Listening Ц)))
Now listen and complete the information about Adam Smith's life.
G Speaking
Discuss these questions with your partner.
What use is the study oi economics?
What trade-offs do you make every day?
How do the decisions we make affect the rest of the world?
Task
Give a two-minute talk on the history of economic thought.
First, read text 2 again and make notes below on the following.
' early economic thinking • the classical economists neoclassical economics
Notes:
In this unit you learnt about Adam Smith, a famous thinker' from Scotland. Who are th»-' most famous 'thinkers' from your country?
Work with a partner and decide which Russian thinkers have been most influential. Choose from the following: Kondratyev. Leontyev. Stolypin, Lenin.
Magazine article
Write a magazine article about one famous thinker from Russian history. Use the guide to help you organise your article.
TITLE:
PARAGRAPH 1
Who is this thinker and what are they best known for?
PARAGRAPH 2
Biographical information: when and whew bom family bio important points m hie.
PARAGRAPH 3
What was his her message?
What were his her influential thoughts?
PARAGRAPH 4
Why do you think this person is important?
Write 100-150 words
Pronunciation guide
Convenience>,.-ni:;ii;nis
Data '.)<•:!•>
Society
Stolypin
Kondratyev
Lenin
Leontyev
8
Kt. II 6u!l)t К fr^n^md Uxl 1
Before
you read
Discuss
the following with your partner.
Econometrics
is a term that economists use. -* Look at the word:
eco.no + metrics What
do you think it means?
A Vocabulary
from
one year to
Prices usually the next.
People work in order to money.
My grandmother's only is
her pension.
Einstein is famous for his of relativity.
The police search for to
help them find the criminal.
If you blue with red you
get purple.
Government show that
crime is rising
People their money in
bank accounts.
Уои can use a ruler to the siso
of things.
A person's is the money they
earn each month from work,
llis of the problem is very good.
In experiments, scientists try to find out what makes change.
An expert in a subject who works and teaches at a university :s known as an
Econometrics
Economists like to tnaki theories. Tlicy theorise afxiut why inflation happens, for exampk . or what causes unemployment. lint theories are 1101 useful il you cannot test thern. This is true lor all sciences, ami the same for economies
I'o test a theory, you Inst need to «и Ik t what scientists call i in)tinea!evidence. That's evidence that can he measured, like money spent 01 babies born. When you have collected the evidence, you're ready to do the maths and statistics to test your theory. Economists call their maths i conotiictrics.
>
1 9
<
Г I jf TO F < С, r,,
amount someone saves = their income x their happiness to save
Of course, we can't measure happiness to save exactly, but with econometric mathematics we can give it a value. Then we can see how that value differs between groups of people or cultures. Econometrics is about finding relationships between variables - in other words relationships between values that change. Economists try to find out if variable A changes every time value В changes. They want to find out if variable A is dependent on variable B. This is called analysis, and there are two main kinds of econometric analysis: rime-series analysis and cross-sectional analysis.
Time-series analysis shows how variables change over a period of time. How salaries increased over the last century, for example. Gross-sectional analysis compares variables at one point in time. The salaries of men compared to women right now, for example. Of course, economists like to make things more complicated than that. Sometimes they combine cross-sectional with time-series analysis, and this is called panel data analysis.
10 Macmillan Guide lo
Economics Unit 1
И В Comprehension
Now read the text again and choose the best answer А, В or С to complete each sentence.
Econometrics is ...
A the maths that economists use. В away to measure how much someone saves.С aformula to find out why peoplesave.
panel data analysis ...
A only shows differences over time. В only shows differences between groups. С shows differences between groups and changes over time.
Econometrics is ...
A only good for proving theories. В good for making practical economic
decisions. С only good for academic work.
Before you listen
Discuss the following with your partner.
The table below is an example of econometric data.
What does the table show?
Is this time-series analysis or cross-sectional
analysis?
И
С Listening 4)))
Weekly spending by children aged seven to fifteen in the UK
Before you read 13
What does economics study? 17
What are 18
microeconomics and macroeconomics ? 18
Before you listen 20
Before you read 22
History of economic thought 23
Before you listen 26
Before you read 27
Econometrics 28
Before you listen 29
Before you read 35
The law of demand 35
Before you listen 36
Unit 41
Before you read 41
The traditional economy 41
Before you listen 42
Before you read 44
The market economy 44
Before you listen 45
The planned economy 47
Before you listen 52
Before you read 53
Before you listen 56
Revision Vocabulary Units 1 to 4 58
Before you read 60
Consumer choices 62
Before you listen 72
Before you read 74
Costs and supply 74
Before you listen 75
Unit 77
Before you read 77
Market structure and competition 77
Before you listen 78
Before you read 79
Monopolies 79
Unit 84
Before you read 84
The labour market 84
Before you listen 85
Before you read 86
Supply of labour 86
Before you listen 88
44Unit 90
45Before you read 90
70Factors of production 90
85Before you listen 92
Before you read 93
Division of labour 93
Before you listen 94
Revision Vocabulary Units 5 to 8 97
Before you read 97
Surplus 98
Before you listen 99
Before you read 101
Price discrimination 101
Before you listen 102
Welfare economics 104
Before you listen 105
Before you read 106
Government revenue and spending 106
Before you listen 107
Before you read 109
Wealth, income and inequality 110
Before you listen 112
Before you read 113
Poverty 114
Before you listen 118
Macroeconomics 121
Before you listen 122
Before you read 123
ф D Vocabulary 123
Aggregate demand and aggregate supply 123
BP E Comprehension 125
Before you listen 125
0 F Listening *))) 125
ff G Speaking 126
Task 126
Revision Vocabulary Units 9 to 12 128
Unit 129
Before you read 129
Money 129
^ В Comprehension 130
Before you listen 130
В с Listening Ц))) 130
Before you read 130
0 D Vocabulary 131
Banks 142
В E Comprehension 143
Before you listen 143
F Listening Ц))) 143
G Speaking 144
Unit 145
Before you read 145
ff A Vocabulary 145
Fiscal policy 145
P В Comprehension 146
Before you listen 146
С Listening 4))) 146
Before you read 147
0 D Vocabulary 147
Monetary policy 147
Before you listen 150
rehension 150
Before you read 153
A Vocabulary 153
Interest rates and the money market 153
В Comprehension 154
С Listening H))) 155
Before you read 156
fiJ D Vocabulary 156
Economic shocks 156
Before you listen 159
G Speaking 160
Before you read 161
fif A Vocabulary 161
Inflation 161
Before you listen 163
Before you read 165
ff D Vocabulary 165
Unemployment 165
Before you listen 166
F Listening H))) 166
E Comprehension 166
G Speaking 166
9 H Writing 167
Revision Vocabulary Units 13 to 16 168
Unit 169
Before you read 169
Economic growth 170
9 В Comprehension 172
Before you listen 172
ff С Listening Ц))) 173
Before you read 173
ff D Vocabulary 173
The business cycle 174
fi? E Comprehension 175
Before you listen 175
F Listening И))) 176
H Writing 176
Before you read 177
f A Vocabulary 177
The open economy 177
? В Comprehension 178
Before you listen 179
С Listening 4))) 180
Before you read 180
BP D Vocabulary 180
Exchange rates 181
0 E Comprehension 183
Before you listen 183
F Listening H))) 184
G Speaking 185
Task 185
Before you read 186
A Vocabulary 186
Exchange rate mechanisms 186
й В Comprehension 187
Before you listen 187
0 С Listening 4))) 187
Before you read 188
9 D Vocabulary 188
International trade 188
Before you listen 189
В F Listening 4))) 189
G Speaking 190
Task 190
Unit 191
Before you read 191
В A Vocabulary 191
Less developed countries 192
в В Comprehension 193
Before you listen 193
0 С Listening *))) 193
Before you read 193
В D Vocabulary 193
The Russian economy in the 19th century 194
fij E Comprehension 195
Before you listen 195
F Listening 4))) 195
Task 197
H Writing 197
A Vocabulary 197
в? В Comprehension 199
Before you listen 199
0 С Listening 4))) 199
Before you read 199
ff D Vocabulary 199
Russia's foreign trade 200
9 E Comprehension 201
Before you listen 201
Revision Vocabulary Units 17 to 21 203
games and hobbies: £0.90 £ (5)
Now listen to somebody talking about a survey of young people's spending habits. Fill in the gaps in the table.
Before you read
Discuss these questions with your partner.
Why do you think gold is expensive?
-> What might bo the reason that so many electrical goods are quite cheap now?
ff D Vocabulary
Complete each sentence with a word from the box.
applies available confusing curve demand exception impressive increase law limited set shift taxes
The law of demand
Economics can often Ы* very confusing Econometric formulas ami impressm charts an sonu nines impossible to underst.uid I hanktully though, some economic ideas are coinpk tely obvious i >ne ol tluse ideas is the Uric m <Linut\ii Economists ire alway s disagreeing with each "flier, but thi law of demand is the only ilium they ill agree on. They ill agree on ii because it makes sense even to non-economists like you and iik
Demand is how much of the same good n service pcopk would like (" buy. Tile law ol ik maud says that demand for something falls .is its price risis. Economists show this concept with the th nuuul сш-:\ which you can see in figure 1 on page 12
Flu- reason why the law of demand works is quite obvious: the money we have is limited If something becomes more expensive,we will bave less money available to spend on our other in . .is If'the product or service is not a necessity we will decide to buy less of it
Most rules liavt exceptions, hut economists agrei that there are very lew exceptions t. the law of demand. U even applies t.. basic necessities liki waler. When wall i becomes more ex|4'iisivi . people find ways to use lessWhen tile govcrnmeni put higher taxes on petrol, people try not to ust their ears so often. The fall in demand might be very small, but il is real.
COFFEE
SHOP
So price has ail el't'eet on demand, hut the strength ot' the effect varies The strength of the price / demand relationship is called pricc elasticity. Economists use a simple econometric formula to measure price elasticity for a certain product in a particular market. This helps governments and companies set prices at the correct level for a particular time and plan price increases.
Don't forget, though, that other things affect demand apart from price. For example, during a very cold winter, demand for heating fuel like gas or coal will rise at any price. If the winter is unusually warm, then demand for fuel will tall Keononiisls say that these situations cause a shift in the demand curve You can see this in iigure 2.
The
Demand Curve
»
40 SO tO W *» 1Л0
Quantity
OtnuiwM
figure 1
HI
«Ю Ы)
Ю
SB« ICO UuJ.'.M;
P>IWIftl1ll1The Demand Curve
figure 2
J
Now read the text again and decide whether these statements are true or false.
The law of demand is easy to understand.
The law of demand says that when people want more of something, its price rises.
There are no exceptions to the law of demand.
Price elasticity shows how much prices change when demand changes.
There are many reasons why people decide to buy something, not only price.
A shift in demand changes the shape of the demand curve.
Before you listen
Discuss the following with your partner.
The graph below shcrws one of the basic relationships in economics: supply and demand.
Talk about the graph with your partner.
Can you label the diagram with the words from the box?
F Listening
Now listen and check if you were right.
Amount bought and sold
Demand curve ■ Equilibrium point
Price ■ Supply curve
Supply and Demand
tD/FD
tD/fD
tD/fD
tD/fD
tD/fD
tD/fD
12 4 . - * С . . fl * *i . i о * 111 Urn 2
G Speaking
Discuss these questions with your partner.
Apart from price. what other things affect demand for a product or service?
If you were a producer, how would you react to increases, or the opposite - decreases m demand?
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tf*
ГГМГ1,
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Task
Give a two-minute talk on the relationship between demand and supply.
First, read text 2 again and look at the diagram for exercise F Listening.Then make notes on the following:
the law of demand and the reasons for changes m demand
the supply curve and the reasons for it
how the market takes into account the needs of producers and consumers
Pronunciation guide
Econometrics ik^nivnu-trik Variable Че-эилЫ Empirical mipmkl Curve k'i:\ Necessity vsoti Elasticity i:l&*4ti>oii Fuel I |u:ol.
И H Writing
With a partner, look at the supply and demand charts for ice cream and answer the following questions together.
What do the two charts compare?
What happens to the supply of ice cream as price increases?
-> What happens to demand for ice cream as price increases?
-> What changes m June - supply or demand?
Why do you think there is a shift in demand for ice cream in June?
Report
Now write a short report describing the information in the charts. Organise your report like this.
PARAGRAPH 1
Introduction.Explain briefly what the charts are about and, very generally, what they showBegin like this:Both charts show demand and supply curves for ice cream. The charts also show ...
PARAGRAPH 2
The supply curve.Describe the supply curve for ice cream. Explain the relationship between price and supply. Give example figures from the chart to illustrate your points. Note that the supply curve is the same for both months.Begin like this:The supply curve for both December and June is the same. When production is low. the price ...
PARAGRAPH 3
The demand curve.Describe the general relationship between price and demand. Give example figures from the chart to illustrate your points.
Begin like this:The charts also show that there is a relationship between demand for ice cream and price. Demand rises ...
PARAGRAPH 4
Shift in demand.Describe the difference between the demand curve for December and June. Mention that the equilibrium point is higher in June than in December (give figures'). Give reasons for the shift in demand.Begin like this:However, there is a big difference between the demand curve for December and the demand curve for June .
Natoxllin
Ou*4«to Economic»
Unit . 13
Unit
Before you read
Discuss these questions with your partner.
Imagine a world without money.
How do you think society would be run?
-» Would there be an economy ляwe understand it?
-* Can you think of any examples oi situations where people don't use money, either from the past or now?
Do you know what a traditional economy is?
в A Vocabulary
Choose the correct answer А, В or С from the list below.
Although we can buy meat in the shops, some people still like to animals as a hobby
is another word for extra things
that are not needed.
There are still of people living
traditional lives in the rainforests of South America
In most modern societies like
celebrations and dances have disappeared.
Corn and wheat are two that
farmers grow in their fields.
One of the of playing sports is that
you keep fit.
Ono of the of living in a city is the noise.
Many African countries suffer from regular when no rain falls for months
Heavy rain causes in many parts of
Europe each year.
K.ist Asian countries are well known for their
industries such as computers
and cameras.
Exercises and sports at school are sometimes called education.
|
1 |
chase |
hunt |
eat |
|
2 |
surplus |
В goods |
< shortage |
|
3 |
customs |
tribes |
pygmies |
|
4 |
parties |
! patterns |
customs |
|
3 |
crops |
animals |
foods |
|
6 |
goods |
disadvantages |
benefits |
|
7 |
drawbacks |
В benefits |
customs |
|
8 |
floods |
droughts |
hurricanes |
|
9 |
floods |
droughts |
hurricanes |
|
10 |
agricultural |
heavy |
technology |
|
1 11 |
physical |
mental |
< fun |
В Reading 1
The traditional economy
It's hsird to imagine our lives without coins, banknotes ami credit cards. Vet for most of human history people lived without money. For thousands of years human societies had very simple economies There were no shops, markets or traders. There were no employers, paid worki rs or salaries. Today, we call this kind of economy the tmditioiuil п-тинпу.and in some
parts о!" Asia. South America and Africa this system still exists.
People who live in a traditional economy don't have money because they don't need it. They live lives of subsistence. That means they hunt, gather or grow only enough food to live. There is almost no surplus in the traditional economy, and there is almost no property Families may own simple accommodation, but land is shared by all the tribe Flconomie decisions are taken according to the customs of the tribe. For example, every family may need to give some of the crops thev grow to the tribal leader, but keep the rest for themselves. They don't do this because it makes economic sense. They do it because the tribe has always done it. It's simply a custom.
Custom, also, decides what jobs people do in the traditional economy. People generally do (he jobs that their parents and grandparents did liefore them. Anyway, there aren't many jobs to choose from in the traditional economy Men are hunters, farmers or lx>th. The woman's place is at home looking alter children, cooking ami home-making. This division of labour I>et ween men and women is another characteristic of the traditional economy. Whatevei the work is, and whoever does it. you can be sure it's hard work. This is because traditional economies have almost no technology. Physical strength and knowledge ot the environment are the tools for survival.
Like any other economic sy stem, the traditional economy has its benefits and drawbacks Probably the biggest benefit is that these are peaceful societies. People consume almost everything they produce and own practically nothing. They arc equally poor. For all these reasons, war is almost unknown in these societies.
However, people who live in traditional societies are among the poorest people in the work!. Because custom decides what people do, nothing in these societies ever changes, because there is no technology, people depend on nature to survive They have no protection from environmental disasters like droughts and floods. They are always in danger of hunger and disease.
Hut the traditional economy is in danger itself. There are only a few examples left on the planet In lot) years from now, it may have disappearediorc\ er
Now read the text again and match each paragraph with the correct heading.
PARAGRAPH 1
paragr . f !
paragraph 3
paragraph a
paragraph
PARAGRAPH 6
Life without money
The advantages of the traditional economy The future of the traditional economy The disadvantages of the traditional economy The importance of tradition Work in the traditional economy
Before you listen
Discuss these questions with your partner.
What kind of people do you think still live in a traditional economy today?
Where do they live?
What are their lives like?
0 С Listening Щ)))
Now listen and complete the notes about the Mbuti. Use one to three words for each gap. Then listen again and check your answers.
Pygmies
Pygmies live in parts of Africa and
(1)
Pygmies are known for their
(2)
They live in societies that still have a
(3)
The Mbuti
Ккп
ar Ci»<4r тс £ ■ ' 1rv ■1' * 3 15
They live in houses made from
)
) do the hunting.
) build houses.
) look after the children.
Before you read
Discuss these questions with your partner.
-* Do you think most countries have a market which is free from government management?
Can you think of any examples supporting or disagreeing with this idea0