Economics
VARIANT I
PRICE AND DEMAND
The following text will introduce you to the topic of the effect of price and income on demand quantities.
T***rice Responsiveness of Demand
Tabl. 3 presents some hypothetical numbers for t***elation between ticket price and quantity demanded, ot***things equal.
Tabl. 3. The Demand for Football Tickets
PRICE
(£/ ticket)Quantity of tickets demanded (thousands/game)12,50
10,00
7,50
5,00
2,50
00
20
40
60
80
100Fig. 2 plots the demand curve, which happens to be a straight line in this example.
Ticket price
Quantity of tickets
Figure 2. The Demand for Football Tickets
For given prices of related goods and consumer incomes, hig***ticket prices reduce the quantity of tickets demanded.
How should we measure t***esponsiveness of the quantity of tickets demanded to t***rice of tickets? One obvious measure is the slope of the demand curve. The downward slope of the demand curve shows that quantity demanded increases as t***rice of a good falls. Each price cut of £ 1 leads to 8000 extra ticket sales per game.
Suppose, however, that we wish to compare t***rice responsiveness of football ticket sales with t***rice responsiveness of the quantity of cars demanded: clearly, £1 is a trivial cut in t***rice of a car and will have a negligible effect on the quantity of cars demanded.
When commodities are measured in different units it is often- best to examine t***ercentage change, which is unit-free. This suggests that we think about the effect of a 1 per cent price cut on the quantity of cars and football tickets demanded. Similarly, it is not the absolute number of cars or tickets we should examine but t***ercentage change in quantity demanded. Not only does this solve t***roblem of comparing things measured in different quantity units, it also takes account of the size of the market. Presumably an extra sale of 8000 tickets is more important when ticket sales are 4000 than when they number 40000.
Thus we reach the definition of t***rice elasticity of demand, which economists use to measure responsiveness to price changes.
T***rice elasticity of demand is t***ercentage change in the quantity of a good demanded divided by the corresponding percentage change in its price.
Although we shall shortly introduce ot***demand elasticities - the cross price elasticity and the income elasticity - the (own) price elasticity is perhaps the most frequently used of the three. Whenever economists speak of the demand elasticity they mean t***rice elasticity of demand as it has been defined above.
If а 1 per cent price increase reduces the quantity demanded by 2 per cent, the demand elasticity is - 2. Because the quantity falls 2 per cent, we express this as a change of - 2 per cent, then divide by t***rice change of 1 per cent (a price rise) to obtain - 2. If a price fell of 4 per cent increases the quantity demanded by 2 per cent, then the demand elasticity is - 1/2, since the quantity change of 2 per cent is divided by t***rice change of - 4 per cent. Since demand curve slopes down, we are eit***dividing a positive percentage change in quantity (a quantity rise) by a negative percentage change in price (a price fall) or dividing a negative percentage change in quantity (a quantity fell) by a positive percentage change in price (a price rise). T***rice elasticity of demand tells us about movements along a demand curve and the demand elasticity must be a negative number.
For furt***brevity, economists sometimes omit the minus sign. It is easier to say the demand elasticity is 2 than to say it is -2. Whenever t***rice elasticity of demand is expressed as a positive number, it should be understood (unless t***e is an explicit warning to the contrary) that a minus sign should be added. Ot***wise, we should be implying that demand curves slope upwards, a rare but not unknown phenomenon.
Assignments
I. Suggest t***ussian equivalents
the effect of price and income on demand quantities; the downward slope of the demand curve; movements along a demand curve; things measured in different quantity units; price elasticity of demand.
II. t***arts in italics by synonyms
a minor cut; a slight effect; to consider the size of the market; probably, a clear warning
III. Fill in the gaps with the words and expressions from the text
1. How should we measure of the quantity of tickets demanded to t***rice of tickets?
2. Clearly, £1 is a cut in t***rice of a car and will have a negligible effect on the quantity of cars demanded.
3. It is not the absolute number of cars or tickets we should examine but _ in quantity demanded.
4. of demand is t***ercentage change in the quantity of a good demanded divided by the corresponding percentage change in its price.
5. T***rice elasticity of demand tells us about movements along and the demand elasticity must be a negative number.
6. For furt***brevity, economists sometimes the minus sign,
IV. Shorten the following sentences without changing their meaning, like this: Nobody likes prices, which are constantly rising. Nobody likes constantly rising prices.
A demand curve, which slopes.
John is a person who works very hard.
* We must develop a policy, which fixes prices better.
Interest rates, which rise will damp down demand.
An economy, which is rapidly expanding can get out of control
Let's look at the information, which corresponds to this in tabular form.
V. Find in the text English equivalents for the following
кривая спроса; реакция на...; при прочих равных условиях; товар, предмет потребления; снижение цены на 1 процент; процентное изменение в количественном показателе спроса; эластичность спроса в зависимости от изменения цены; измерить гибкость реакции на...; положительное (плюсовое) процентное изменение;, негативное (минусовое) процентное изменение
VI. Answer the questions
What does the downward slope of the demand curve show?
Give the definition of t***rice elasticity of demand. Explain it in your own words.
Name the three types of the demand elasticity as mentioned above.
Explain in your own words how to calculate demand elasticity.
Explain why economists sometimes omit the minus sign and how negative and positive numbers should be distinguished.
VII. Translate the active vocabulary
Построенная (начерченная) кривая спроса отображает воздействие цен и доходов на количественные показатели (величину) спроса. Нисходящая кривая показывает рост спроса по мере снижения цен.
Незначительное снижение цены какого-либо товара мало влияет на величину спроса на этот товар.
Понятия перекрестной ценовой эластичности, эластичности доходов и собственно эластичности спроса в зависимости от изменения цен помогают экономистам измерять гибкость реакции на изменения цен.
В случае нисходящей кривой спроса мы имеем дело либо с повышением количественного показателя спроса (положительное процентное изменение) при снижении цен (отрицательное процентное изменение), либо с обратной ситуацией (падение величины спроса при росте цен).
VIII. Write down a short essay on the suggested topic (25 sentences):
What is Macroeconomics?
IX. Ask all possible kinds of questions (Special, Direct, Disjunctive, General, Alternative) to the underlined sentence in the text. (5 questions).
X. Make the vocabulary (50 words)