20. Arrange sentences according to the text.

1. Although in a perfect market competition is unrestricted and sellers are numerous, free competition and large numbers of sellers are not always available in the real world.

2. Only in the case of franchised local services – local telephone, gas, water, and electricity being the major examples – is there truly a single seller of a service with no close substitute.

3. It is the only one producing in its industry and there is no industry producing a substitute. It may arise from a variety of different causes.

4. In the long run, no monopolist is completely secure from attack by competitors.

5. Every business has competition.

6. The extreme case would be monopoly: a single seller with complete control over an industry.

7. The components of customer preference include the objective features of your product or service: price, service and location.

8. State planning and central control of the economy often mean that government has the monopoly of important goods and services, e.g. most national authorities monopolize the postal services within their borders.

9. Companies with significant financial resources, highly motivated or creative personnel and other operational assets will prove to be tough, enduring competition.

10. Imperfect competition does not imply that a firm has absolute control over the price of its product but at least some discretion in its price decision.

21. Make up a plan of the text.

22. Speak on monopolies and competition.

LESSON 7. INCOME AND INTERESTS

Grammar Presentation: Условные предложения.Бессоюзные придаточные предложения.

Grammar Revision: Функции инфинитива в предложении. Причастие 2 в функции определения.

INCOME AND INTERESTS

In measuring a person’s economic status, the two yardsticks most often used are income and wealth.

Income refers to the total amount of money received by a person or household during a given time period (usually a year). In come consists of wages or labor earnings; property income such as rents, interest, and dividends; and transfer payments, or receipts from government, such as social security or unemployment insurance.

Wealth consists of the net dollar value of assets owned at a point of time. Note that wealth is a stock of dollars (like a lake) while income is a flow of dollars (like stream). We generally include in a household’s wealth its tangible items (like houses, cars and other consumer durable goods, and land) and its financial assets (like cash, savings accounts, bonds, and stocks). The total items that are of value are called assets, while those that are owed are called liabilities, and the difference between assets and liabilities is called wealth or net worth.

Before people can consume anything they must do two things. First they must earn the income to buy the things they want. Then they must decide how the money will be spent. There are two ways to earn income: from work and from the use of wealth.

Income from work. Most of the income comes from work. In return for working, people receive a wage or a salary. The term “wage” typically refers to the earnings of workers paid by the hour or unit of production. “Salary” refers to earnings paid on a weekly or monthly basis. How much you earn will depend on the kind of job, the abilities, the performance and the number of other factors.

Income from wealth. Wealth can be expressed as the value of the things you own. Adding the value of all your possessions, bank accounts, savings, and the like will give you the total amount of your wealth.

Used in certain ways wealth can earn income. Interest and rent are the two forms of income that can be earned by wealth. If you owned a house, you might be able to let others use it for a fee. In that instance economists would say that you used your wealth to earn rent. Wealth in the form of money that is loaned to others or deposited in a savings account, will earn interest. If you are fortunate enough to have funds in your savings account, then you know that the bank pays interest on your account. You also know that you have to pay interest on funds you borrow. For example, if you have borrowed to pay your tuition, you’ll have to pay interest to the lender. Interest is a payment for the use of funds lent by one person for the use of others. Interest represents a price for the use of funds in the same way that wages represent a price for the use of labour. The rate of interest is usually expressed as a percentage per dollar made available for others to use. For example, if you can obtain 8% annual interest by making a loan, you’ll earn for each dollar you allow others (such a bank) to use when interest is computed once at the end of the year. A $100000 loan at 8% annual interest will provide the lender with $8000 annual income at the end of the year. Other types of income are dividends and capital gains that can be generated from the wealth.

Why do different people have such different incomes? Partially it is explained through the theory of prices as wages are the price of labour, rent is the price of land, and interest is the price of capital.

The question about the distribution of income is among the most controversial in all economies. Some argue that high incomes are the unfair results of past inheritance and luck while poverty stems from discrimination and lack of opportunity. Others believe that people get what they deserve and that interfering with the market distribution of income would injure an economy’s efficiency and make everyone worse off. In the broad middle are those who believe that the government should exercise its power to ensure that a social safety net catches those whose incomes fall below some decent standard of living.