ВУЗ: Не указан
Категория: Не указан
Дисциплина: Не указана
Добавлен: 18.10.2024
Просмотров: 167
Скачиваний: 1
goods or services. С Something that companies pay when they first start business.
What could be the opportunity cost of watching television?
AGetting sore eyes. В The cost of buying a television. С Not sunbathing in the garden.
What is the opportunity cost for Alice's decision?
nics: the science с ;mer and firm behaviour
28Macmillan Guide to Economics Unit 5
Discuss these questions with your partner.
How do you make decisions about what to buy?
Do you think people make rational decisions? Why / Why r.ot?
Task
Imagine you are the manager of a small manufacturing business (you decide what the company makes). Give a short talk to your employees explaining what the company's costs are.
First, read the texts again and make notes on the following:
fixed costs
variable costs
Does your company have an economy of scale?
Notes:
Pronunciation guide
H Writing
You're the librarian at your school.The head teacher has asked you to buy some more materials for the library.You can choose from the following.
-> books, including fiction for teenagers, poetry, special interest and hobby books (€10 each)
magazine subscription for or.e year (either a music magazine or a fashion magazine) (€50)
educational CD- ROMS for science, history and technology (€20 each)
a set of encyclopaedias (€100; Your budget constraint is €200.
E-mail to your head teacher
Write an e-mail to your head teacher explaining the budget constraints you have.Tell him or her what you want to buy and why.
PARAGRAPH 1
Explain why you're writing.
Useful words and phrases:
Dear ... , I'm writing in order to
PARAGRAPH 2
Explain your budget constraints and the costs of materials.
Useful words and phrases:
Our current budget constraint is...
There are a range of materials that we could
buy:These include...
PARAGRAPH 3
Say how you intend to spend the money.
Useful words and phrases:
After careful consideration. I think the best purchases would be...
PARAGRAPH 4
Give reasons why you have chosen to spend the money in this way.
Useful words and phrases.
I have chosen, because, would bo a good purchase because, would be very useful for, first, next, in addition, finally
Sign off in a polite way
■ ,
i 29
N*
» m n <
; . .1rt e : f .
. . т
Unit
Before you read
Discuss the following with your partner.
Hero are some things that affect how a market operates. How important do you think each one is?
the size of companies
what products and services are like
what information consumers and companies have about products
ease of entry into the market foTcompanies
companies having the resources and technology th<»y need
^ A Vocabulary
Choose the correct answer А, В or С from the list opposite.
Companies usually have a with
senior managers at the top and employees at the bottom
McDonald's has a very big of the
fast food market.
Some teachers mark students work using a from A to E.
No one's work is . We all make
mistakes
A perfect economic system may never
A monopoly means an absolute or
complete monopoly.
Not all twins are Some twins are
brother and sister, for example.
Sometimes a person's colour or race can be a to getting work.
We use curtains to light.
Countries have been with each
30
" ■I
■• .\ •i
balanced against each other.
Honey is a healthier for sugar to
make things sweet.
Everyone should have to education.
shape structure building
piece part market share
l I scale I point С grade
good I better С perfect
A is 1 live С exist
pure 1 good С clean
similar identical same
i gate I barrier С block
barrier close < block
shopping trading selling
equilibrium middle equal
difference addition substitute
access openings entrance
^ Reading 1
Market structure and competition
The point
is where two things are
it affects price. In some market structures, companies have more control over pricc. In other market structures, consumers have more control over price.
You can think of market structure as a kind of scale. At one end of the scale is perfectcompetition and at the other end is pure monopoly.In a market with perfect competition, there are many companies supplying the same good or service, hut none of them are able to control the price. This sounds fine, but in reality it is very difficult for such a market structure to exist. What's needed?
First of all, there must be many small companies competing. Each company has its own small share of the market. If one company has a much larger share than any other, it can affect price, and perfect competition will no longer exist.
Secondly, products or services from different companies must be the same. This doesn't mean that everything on the market has to be identical, but they have to be perfect substitutes. In other words, one company's product must satisfy the same need as another company's. Imagine a company produces a television that also makes tea. Its product is different from everyone else's. If it chooses to raise the price of its TVs, customers may still want to buy them because of this difference.
Thirdly, customers and companies must have perfect and complete information. This means that they know everything about the products and priccs onthe market and that this information is correct.
Fourthly, there mustn't be any barriers to new companies entering the market. In other words there must not be anything that helps one company stay in the market and blocks others from trading.
Finally, every company in the market must have the same access to the resources and technology they need.
If all of these conditions are met, there is pcrfect competition. In this kind of market structure, companies are price takers.This is because the laws of supply and demand set the pricc, not the company. IIow does this work? Very simply! An increase in demand will make a company increase its price in order to cover costs. It might try to push its prices even higher than necessary so that it can
make more profit. However, it will not be able to do this for very long. The increase in demand and the higher price will make other companies want to enter the market, too. This will drive the price back down to equilibrium.
В Comprehension
Now read the text again and decide whether these statements are true or false.
Market structure describes how
competitive a market is. T d / F П
Perfect competition and pure
monopoly are opposites. tD/fD
Fbur conditions are necessary for
perfect competition to exist. T П/ F D
In perfect competition, every company makes a slightly
different product. T □ / F □
Perfect competition makes it easy
for new companies to start trading. T П / F D
When there is perfect competition, companies are able to set any price
they want. tQ/fD
Before you listen
Discuss the following with your partner.
Macmillan
Guide ю Economics Unit
6
31I a monopoly I an oligopoly
С Listening
Now complete each sentence with words from the box.Then listen and check your answers.
I a monopsony I imperfect competition
Any market structure apart from perfect competition is called
2 is when there is only one seller of a
good or service.
3 is when only a small number of
sellers control the market.
4 is when there is only one buyer in
Micro nics;the
scienceof consu d firm
behaviour
Before you read
Discuss these questions with your partner.
-* Can you think ofany reasons why there are monopolies?
-* Do you think monopolies have advantages as well as disadvantages?
В D Vocabulary
Complete each sentence with a word from the box.
aggressive cables i illegal
Innovation legal naturally
network occurs printing
publishing takeover
A is a set of connections.
When one company gams control of anolher company it is called a
Raw materials are things like wood or oil that exist
Electricity travels along to reach
our houses.
people get what they want by
violence and force.
> companies are responsible for the
writing and pictures in books, etc.
1 companies make books.
is inventing and think mg of new
solutions to problems.
■ И something is it is allowed by law.
When something is it is not
allowed by law
If a problem you will have? to deal
with it.
32
И»; ■!4 ■<j
. " • '
I
■
с m
.
с•
II
'
I
*
P Reading 2
Monopolies
In a monopoly, (на- company has a much larger market share than any other company In I act. their share is so big that other companies cannot really compete. When there is a monopoly, the normal laws of supply and demand do not always work. Monopolies come in different kinds, hut a pure monopolyis when there is only one company in the market providing a particular product or service This situation, in fact, is the exact opposite of jtert'ect competitionHow do pure monopolies happen-
Some monopolies occur naturally This happens when a company manages to create an economy of scale.An economy of scale is when variable costs of production increase more slowly than increases in supply Every company would like to be in this situation. 1'nfortunately, it's not easy to achieve Economies of scale arc possible lor companies w hich need a lot of money to set tip but much lessmoney to run.
' and firm behaviour
A telephone company is a good example. Telephone companies have to spend millions of pounds laying cables. However, once they have made the network, running the system does not cost so much. Any other company that wants to compete will have to make their own network. Not surprisingly, not many bother!
However, the world of business is a jungle, and there are more aggressive ways to create a monopoly. One of these is by making takeovers. This means that a more powerful company buys a smaller one in the same industry. Takeovers happen vertically or horizontally. In a vertical takeover,a company buys companies that supply it with materials or services. Kor example, a publishing company might buy a printing business. In a horizontal takeover,a company buys its competitors. The competitors then become part of the first company.
One final way a monopoly occurs is for the government to make it happen. This is called a legal monopoly, but not because other monopolies are illegal! It is called a legal monopoly because it is created by law. The government may decide that a competitive market is not good for a certain industry. In this case, it can make one company the only legal supplier. Sometimes, it provides the service itself. This is called a state monopoly.The postal service in many countries is an example of a state monopoly.
Generally, monopolies are not good for consumers. This is because in a monopoly, the laws of supply and demand do not work in the same way. A company with a monopoly becomes a price maker.They have much more power to set the price for their product or service. Also, they don't usually spend money on innovation because they don't need to. The bottom line, as they say, is that monopolies mean less choice for consumers.
pure monopoly
natural monopoly
legal monopoly
horizontal takeover
-
vertical takeover
И E Comprehension
Before you listen
Discuss this question with your partner.
What dangers might monopolies face?
^ F Listening Щ)))
Now listen to someone talking about the threats which face monopolies .Tick the things in the list that are mentioned.
1 rising variable costs□
2 a fan in demand
□
3 a change in fixed costs
□
4 innovation by another company
□
5 takeover from a foreign company
□
price maker
A a company with the power to set prices in the market
В when a company buys a competitor
С when only one company supplies to the market
D when a company buys asupplier
E when a monopoly occurs due to economies of scale
Now
read the text again and match the phrases on the left with the
definitions on the right.
MacmMlan Guide to Economics Unit 6 33
Discuss these questions with your partner.
• Do you know any industnes where a monopoly exists?
What are the benefits or drawbacks of having я monopoly in that industry?
Give a two-minute summary of what perfect competition is. First, read text 1 again and make notes below on the following and then present the talk to your class.
What is perfect and imperfect competition0
What is needed to make perfect competition possible?
34 M. «t
i
Pronunciation guide
Access ni "д-кч> Identical uleiitikl Monopoly m.ini>ftili Affect Mi-ki Barrier Kiri.vn Equilibrium i:kw; ibroin Occur л к <:ui Vertically <■ nkl Horizontally Imn/nmli