Study the words and the word-combinations.

1.  Read the text and assimilate its information [6 с. 30—34].

Changes in Demand

A change in demand is a change in the relationship between the price of a good and the quantity demanded caused by a change in a demand determinant other than the price of the good. Using logic and observation, it’s possible to make hypotheses about the possible impact of changes in various determinants on the demand for a good:

1. Changes in consumer income.

An increase in income available for spending increases the ability of consumers to buy an item. Increases in income usually increase the demand for most goods, while decreases in income tend to decrease the demand for most goods. Goods whose demand will decline as income increases are called inferior goods. Normal goods are those whose demand increases when income goes up.

2. Changes in wealth.

The demand for some goods is particularly sensitive to changes in wealth. For example, the demand for luxury goods is likely to decline if there's a sharp decline in wealth.

3. Changes in the prices of other goods.

Our willingness to buy a particular item also depends on the prices of related items. The demand for a good also can be influenced by a change in the price of its complements (goods whose use together enhances the satisfaction a consumer obtains from each). For example, a decrease in the price of compact disc players is likely to increase the demand for compact discs because these two goods complement each other.

4. Changes in expectations of future prices.

If you as a buyer expect that the price of an item will increase next week, you're likely to buy more of the item this week. If the item can be stored you’ll increase your demand for an item and stock up.

5. Changes in tastes or fashion.

A change in tastes can increase or decrease the demand for an item. For example, the demand for long-playing records has decreased as buy­ers have been attracted by the superior sound quality of compact discs.

6. Changes in the number of buyers served by the market.

An increase in the number of buyers in the market tends to increase the demand and conversely a decrease in the number of buyers in the market tends to decrease the demand for a good.

In addition, the demand for particular goods can be influenced by weather, demographic trend, government subsidies or taxes and other factors.

NOTE:

a decrease in the price of... is likely to increase the demand for... – вероятно, снижение цены на ... повысит спрос на ...

2.  Answer these questions basing your answers on the text:

1) What causes a change in demand?

2) What helps predict the impact of changes on the demand for a good?

3) What is the relationship between income and demand?

4) What is the difference between interior and normal goods?

5) Explain how changes in the prices of other goods influence the demand for a particular good.

6) Describe the behaviour of buyers in a market if price increases are expected.

7) Name all the factors which influence a change in demand.

Say whether these statements are true or false, and if they are false, say why?

1) When people offer money for particular goods, they indicate that demand exists.

2) An individual can't change the price of the commodities he wants.

3) In most economic systems, the prices of the majority of goods and services don’t change over the long periods of time.

4) The change in demand results from a change in tastes.

5) If consumer income declines, there’s no demand for most goods.

4.  Study the different meanings of the following words and use them to translate the sentences:

1) Demand keeps pace with supply (идти в ногу, поспевать).

2) The supply exceeds the demand.

3) The government turned down (отвергать) the miners’ demands.

4) This material is in great demand.

5) Demand is indicated by our willingness to offer money for particular goods and services.

6) Let's assume that producers supply enough to meet demand without any changes in the price level.

1) Coal stocks are low.

2) He has £ 10,000 in stocks.

3) His stocks are going up.

4) Stocks fell several points.

5) These books are out of stock (быть распроданным) now.

6) The market is well stocked with these goods.

7) We don't stock such goods.

8) The owners of business firms are stockholders who invest their money with the expectation of receiving future returns (profit).

9) The value of stock exchange operations is self-evident.

10) Stock prices fluctuations help businessmen and the public understand how solid a company is, which branches are most profitable and where investments should be made.