Unit 6. Market, Supply and Demand.

Pre-reading tasks:

Look at the pictures. Where are all these people? What are they doing?

What is in common between them?

Vocabulary.

Read the definitions of the following economic concepts, try to remember them and be ready to use.

Market – a set of arrangements by which buyers and sellers are in contact to exchange goods and services.

Goods – a) objects produced for sale; b) output which bestows utility on the person possessing it.

Service – the non-physical output which flows from the employment (використання) of a factor of production.

Demand – quantity of goods or services people want to buy.

Supply - quantity of goods or services people want to sell.

Customer – an individual who purchases systematically or frequently a commodity or service.

1. Match English and Ukrainian equivalents.

1. household	спосіб життя
2. to avoid failures	відмітна, характерна риса; особливість
3. the customer market	читацькі звички
4. geographic segmentation	попит
5. product market	пропозиція
6. attitude	перепродувати
7. lifestyle	ринок факторів виробництва
8. medium of exchange	сегментація ринку
9. specialty	стать
10. self-concept	сім’я, домашнє господарство
11. reading habits	ринок продуктів виробництва
12. location	засіб обміну
13. gender	самооцінка, самосприйняття
14. factor market	взаємозалежний
15. to resale	відношення (до чогось)
16. interdependant	уникнути невдач
17. supply	місце проживання, мешкання
18. demand	споживчий ринок
WARMING UP.

• Think and say your opinion.

• Can modern world exist without market? Why?

• What is the connection between scientific technical progress and market?

• What is initial: supply or demand?

• What is the interdependence between demand and progress?

Read the text and be ready to render it.

Market, supply and demand

Market is a medium for exchanges between buyers and sellers. Some markets are located in one place; others connect buyers and sellers by telephone, fax and telex, especially if they are financial markets. Markets for goods and services are termed “product” markets; for labour and capital – “factor” markets. Both markets are interdependent because the demand for a factor is derived from the demand for its product.

Markets can be classified into two broad categories. The consumer market consists of individuals or households that purchase goods and services for personal use. The industrial market is made up of enterprises that buy goods and services for resale to the consumer market or for their own operations. Market is diverse; it is composed of many different market segments. Market segments are formed by groups of individuals or organizations within a market that share certain common characteristics.

There are four most common bases for segmenting the consumer market. They are geographic, demographic, behavioristic and psychographic. Geographic segmentation is based on the place of living. Potential customers in different locations have special needs or wants. A closing manufacturer, for example, needs to produce and market heavier coats for people living in the North and not for those living in the South. In demographic segmentation the numerical characteristics of a population are studied. They are: buyers’ gender, race, religion, education, occupation, income etc.

Another way to segment a market is to classify customers on the basis of their knowledge of attitude toward use of or response to products or product characteristics. This approach is known as behavioristic segmentation.

Psychographics is a relatively new specialty that characterizes consumers in terms of their social roles, activities, attitudes, interests, opinions and lifestyle. In segmenting a market psychographically specialists study a person’s brand preferences, favoured radio and TV programmes, reading habits, values and self-concept.

The work of the free-market system is defined by supply and demand. Supply is a specific quantity of a good or service that the producer or seller wants to sell at a given price. Demand is a specific quantity of a good or service that a consumer wants to buy at a given price. Supply is related to resources. The amount that producer can supply depends on the resources and technologies available. Demand is related to wants. If goods and services were free, people would simply demand whatever they wanted. Demand always exceeds supply, because human wants are unlimited, but resources are limited.

To avoid failures in business sellers need to focus their efforts on an investigation target markets, i.e. specific groups of customers to whom a company wants to sell a particular idea, good or service.

COMPREHENSION CHECK

Exercise 1. Are these statements true or false?

1. Market is a place where buyers and sellers are in contact to exchange goods and services.

2. The demand for goods and services promotes demand for labour and capital.

3. The consumer market is created for wholesale trade only.

4. Industrial market is aimed at satisfying the personal needs of consumers.

5. The market can be divided into segments according certain characteristics.

6. Behavioristic segmentation includes customers of definite gender and race.

7. Geographic segmentation is based on the knowledge of geography by consumers.

8. Psychographical segmentation is based on customers’ preferences, habits and values.

9. Product market is a market for goods and services.

10. Supply and demand define the work of market.

Exercise 2. Answer the following questions.

1. What is a product market?

2. What is a factor market?

3. What’s the difference between consumer market and industrial market?

4. What are the most common bases for segmenting the consumer market?

5. What characteristics are taken into consideration in demographic segmentation?

6. What should specialists study while segmenting a market psychographically?

7. Why does demand always exceed supply?

Let’s ponder!	Why are people’s needs endless? Wouldn’t it be better to restrict them and be satisfied with necessities only? Can you propose another way of usage the National Product, not only for satisfying the growing materialistic needs? What can make you happy at the moment? 5. What sum of money is enough to make you happy?
		GRAMMAR Active Voice. Present Perfect and Present Perfect Continuous.

Present Tenses
Perfect
have/has	Past Participle

1. Unfinished past:

Professor has taught economics for 20 years.

Dr X 2005 Nobel Prize Winner has written 17 manuals and monographs.

2. Present result:

Japan has become the best in developing computers.

3. Experience gained by a person:

Have you ever discussed the opportunity costs of this business with your boss?

Perfect Continuous
have/has	been	Present Participle

1. Unfinished past but not permanent

They have been working in this programme for five weeks.

2. Present result emphasizes the repeated activity

My hands are dirty because I have been repairing my bike.

3. Experience gained by a person

Have you ever been working at your book for hours?

Read the text about the illusiveness of happiness while possessing money.