Equilibrium Point
It should be clear to you after reviewing the graphs that the key factor in determining supply and demand is price. Sellers prefer a high price and buyers prefer a low price. If you were to lay the two graphs of figure 1 and 2 on top of one another, the supply line and the demand line would cross at that crossing point, the quantity demanded and the quantity supplied would be equal. Figure 3 illustrates that point. At a price of 5 dollars the quantity demanded and the quantity supplied are equal. It is known as the equilibrium point. That would become the market price. Market price is determined by supply and demand. In a free market, prices will always tend toward the equilibrium price.
The interaction between supply and demand determines the market price in the long run. Proponents of a free market would argue there is no need for government involvement or government planning. If surpluses develop, a signal is sent to sellers to lower the price. If shortages develop, a signal is sent to sellers, to increase the price. Eventually, supply will again equal demand if nothing interferes with market forces.
Figure 3
(Equilibrium Point)
Ex. 3. Give English equivalents to the following:
предложение (товара), спрос, количество товаров, производители или собственники, в данный период времени, вообще говоря, кривая предложения, эластичное предложение, может повышаться или снижаться, эластичность спроса, в соответствии с, шкала личных предпочтений, товары первой необходимости, предметы роскоши, товары не первой необходимости, точка равновесия, рыночная цена, в конце концов, сторонники свободной торговли, вмешательство правительства, излишки продукции, недостаток (товаров), в конечном счете, факторы рынка
Ex. 4. Insert the correct prepositions if necessary:
1. Supply refers … the quantity of products that manufacturers or owners
are willing to sell … different prices at a specific time.
2. The interaction … supply, demand and price can be shown … a graph.
3. The key factor … determining supply and demand is price.
4. Market price is determined …supply and demand.
5. Prices always tend … the equilibrium price.
6. If nothing interferes with market forces, supply will equal … demand.
7. Supply can be increased or decreased rapidly … response to market
prices.
8. Every day people offer money … particular goods and services.
9. The demand … bananas will probably increase.
10.The supply … cigarettes does not usually fluctuate.
Ex. 5. Study the table. Fill in the gaps with the words from the table.
|
manufacture (v) |
manufacturer, manufacturing, manufactured |
|
relate (v) |
relation, relationship, relative, relatively |
|
vary (v) |
variety, various |
|
consume (v) |
consumer, consumption |
|
govern (v) |
governor, government, governing |
|
own (v) |
owner, ownership, ownerless |
|
supply (v) |
supply (n) |
|
demand (v) |
demand (n) |
1. The quantity of products that manufacturers or owners are willing to sell at
different prices at a specific time is called … .
2. The … of supply, demand and the quantity of the products in the market the
economists show on a graph.
3. Your income allows you to enjoy … goods and services.
4. Thus, in a market economy it is the … who decide what is to be produced.
5. In the UK the … takes nearly 40 percent of national income in taxes.
6. In a true market economy the system is based on private enterprise, with
private … of the means of production.
7. The interaction between the supply and … determines the market price in the
long run.
Ex. 6. Open the brackets using the Present Simple Active or Passive of the
verb
1. Supply (to refer) to the quantity of products that manufacturers are willing to
sell.
2. The quantity of a particular commodity (to make) available to consumers.
3. Supply (to say) to be "elastic".
4. Demand (to indicate) by our willingness to offer money for particular goods
or services.
5. Supply (to equal) demand if nothing interferes with market forces.
Market price (to determine) by supply and demand.
Ex. 7. Agree or disagree with the statements
1.The amount of goods supplied will decrease as the price increases.
2. Such lines as supply curve and demand curve are usually straight.
3. Supply is said to be "elastic" because it can be increased or decreased rapidly
in response to market prices.
4. The quantity of goods demanded will increase as the price increases.
5. Demand is always inelastic.
Ex. 8. Translate into English
1. Спрос на некоторые товары первой необходимости неэластичен.
К этим товарам относятся продукты питания, медицинские расходы,
одежда и т.д.
2. Предложение товара эластично, поскольку оно быстро снижается либо
увеличивается с изменением рыночных цен.
3. Когда люди осуществляют свой выбор при покупке товаров, они
делают это в соответствии со шкалой личных предпочтений.
4. Спрос на товары первой необходимости неэластичен, поэтому мы
покупаем названные товары, даже если цены на них чрезмерно
выросли.
5. Когда спрос и предложение одинаковы, такое положение называется
точкой равновесия, что образует рыночную цену. Таким образом,
рыночная цена определяется спросом и предложением.
Ex. 9. Answer the questions
1. What does supply refer to?
2. How do supply of goods and prices interact? Is supply elastic or not?
3. What does demand refer to?
4. How do demand for different goods and prices interact? In what case is
demand elastic and when is it inelastic?
5. What is a key factor in determining supply and demand? What happens when
the supply line and the demand line cross?
6. Give your own examples of an elastic and inelastic demand.
Learn the vocabulary:
supply - предложение
supply curve - кривая предложения
supplied - поставляемый, предлагаемый
to increase - увеличивать
to decrease - уменьшать
to manufacture - производить
relationship - взаимосвязь
to refer - относиться (к чему-либо)
keep easier - делать легким
various - различный
to provide - обеспечивать
to adjust - 1) улаживать;
2) приспосабливать;
3) регулировать
make available - делать доступным
instance - случай, пример
rapidly - быстро
in response to - вответна
demand - спрос
demand curve - кривая спроса
willingness - желание
to offer - предлагать
to exercise - осуществлять
personal scale of preferences - шкалаличныхпредпочтений
essential commodities - товары первой необходимости
non-essential commodities - товары не первой
необходимости
luxuries - предметы роскоши
decision - решение
measure - мера
to result from - быть результатом чего-либо
steeply - чрезмерно
cheap - дешевый
to review - просматривать
to prefer - предпочитать
to lay - положить
equal - равный
demanded - требуемый
equilibrium point - точка равновесия
to determine - определять
in the long run - вконцеконцов
proponents - сторонники
government involvement - вмешательство правительства
surplus - излишек
shortage - недостаток
to interfere - вмешиваться
market forces - факторырынка
INFLATION
Ex. 1. Learn pronunciation of the following words:
persistent [ ] consequence [ ]
vary [ ] purchasing [ ]
mild [ ] argue [ ]
severity [ ] hyperinflation [ ]
consumer [ ] insurmountable [ ]
occur [ ] exceed [ ]
militancy [ ] company [ ]
enormously [ ] alternative [ ]
value [ ] injection [ ]
Hungary [ ] withdrawal [ ]
cause [ ] margin [ ]
Ex. 2. Read and translate the text: