Revision Vocabulary Units 1 to 4(24)

 

Complete the crossword. Some letters have been given to help you.

 

ACROSS

1 This kind of economy is both planned and free market.

3 The first kind of economy that existed.

4The point where demand and supply meet.

5 This kind of economics simply describes the economy.

6 A measure of how much demand influences price.

10 This kind of economics makes recommendations.

11 This kind of economics locks at the details of the economy.

DOWN

2 This kind of economics looks at the whole picture. 7 In this economy, the government decides everything. 8 This falls as prices rise.

9 In this kind of economy, price is set by supply and demand.

12 Something that can be measured, like money spent or babies born.

 

B1 Find six pairs of opposites.

■ benefits	■ consumer	■drawbacks
■ drought	■ flood	■ manufacturer
■ private sector	■ save	■ shortage
■ spend	■ state sector	■ surplus

B2 Now write five example sentences using as many words as possible from this exercise.

C Complete the text with one word for each gap. The first letter has been given.

 

The traditional economy is the oldest form of economy. It has existed for thousands of years, although today it has almost disappeared. People in a traditional economy do not own (l)p........................They do not earn a

(2) s.......................and thus neither do they pay

(3) t........................ In fact, there is no money.

They live on the raw (4) m....................... that the

forest provides them. They don't grow food or

have any organised (5) a....................... with farms

and (6) с.......................growing in fields. Instead,

they (7) g....................... wild fruit and vegetables

or (8) h.......................wild animals. They eat most

of the food they find, and may (9) h.......................

some food for the winter, but they do not sell it. It's

a difficult life. There are often (10) s.......................

of food when there is not enough to eat. When this

happens, the (11) t.......................must move on to

another part of the

 

 

25 CNH

 

Before you read _

With your partner discuss how you make choices about what you arc going to buy. Think about: budget the price

satisfaction with the goods

 

A Vocabulary

Choose the correct word or phrase.

 

1 If you are m a hurry, it can be difficult to make a maximum / rational decision.

2 The amount of money you have to spend is your budget constraint / deciding factor.

3 The maximum / rational speed limit on this road is 120 kilometers per hour.

4 Quality is often the deciding factor/ budget when people choose something to buy.

5 Some people how much they spend every week.

6 Green is a combination / an alternative of yellow and blue.

7 When you buy something from a shop, you make a purchase / budget constraint.

8 When you something is true, you guess that it is true.

9 The use or satisfaction you get from something you buy is called utility / purchase.

10 Olive oil is a healthy alternative / combination to butter.

 

Reading 1

Consumer choices

Its a hot summer day. You've been out walking all morning and you're getting thirsty. It's also about lunchtime, and you're feeling pretty hungry, too. What luck! Here's a kiosk selling snacks. You've got six euros to spend. You can buy bars of chocolate or bottles of water... or a combination of both. Now you've got another problem: consumer choice.

It you're a neoclassical economist, however, there's nothing to worry about. Neoclassical economists believe that consumers make rational choices. Before a consumer buys something, they think about the cost and the amount of satisfaction the purchase will give them They then compare the price and satisfaction of possible alternative purchases. In the end. they buy what gives them maximum satisfaction at the lowest cost.

So. what will you buy from the kiosk? An important deciding factor is the amount you have to spend. Economists call this your budget constraint Your total budget is six euros. Bottles of water are two euros each, chocolate bars are

 

 

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one euro each. You could buy three bottles of water, or you could buy six chocolate bars. Or you could buy any combination that adds up to your total budget We can put all of this information on a budget line, like the one in figure 1. The budget line shows what combinations ofgoods are possible. Economists call these combinations of goods bundles B ut which is the best bundle? This depends on something called utility. Utility is the economists' word tor the satisfaction we get from a purchase. Each good has its own utility value for the consumer The utility of a bundle depends on two things: the utility of the goods in the bundle, and how much of each good is in the bundle. Figure 2 on page 25 shows the bundles of chocolate and water that give the same level of utility. This kind of chart is called an indifference curve. Any point on the curve has the same utility value as any other point. For example, two bottles of water and two chocolate bars has the same Utility as one bottle of water and four chocolate bars.

In figure 2. we assume that chocolate and water have the same utility value for the consumer. But it water had a higher utility value than chocolate, the curve would be a different shape. Many things can affect the utility of a good. These include the cost of the good, the consumer's income and something called marginal utility.

To understand marginal utility, just think about chocolate bars. Every time you consume a bar of chocolate, the satisfaction you get from the next bar will be less. In other words, you get less utility every time you eat another bar. This decrease in utility is called the marginal utility. The marginal utility is the one of an additional item, for example:

bars of	Marginal	Total
chocolate	Utility	Utility
	-
	9

Out very simply, budget, price and level of utility will all affect your choice at the kiosk. The neoclassical theory of consumer choice says that it is possible to calculate demand for products if we know this kind of information. However, not all economists agree!

 

В Comprehension

Now read the text again and answer the questions.

 

1 According to neoclassical economists, what do consumers want?

A The most satisfaction at the lowest cost.

B The cheapest product.

СTo spend all their money.

 

2 What is budget constraint? AAn amount of money you want to save. B combination of money and satisfaction. C The total amount of money you have to spend.

 

3 What is utility?

A How much of a product you get.

B The satisfaction you get from a product or service.

C The cost оf a product.

 

4 What explains marginal utility? AThe morasatisfaction something gives you. the more you want it.

B The more satisfaction something gives you, the less you want it.

C The more you have of something, the less

satisfaction it gives you.

5 What do neoclassical economists believe about consumers?

A They make logical decisions.

B They Alwaysknew what they want before they go shopping. СThey don't know what they want.

Before you listen_

Not all economists agree with the theory of consumer choice described in the text. Here is a list of reasons why. Complete each sentence with a word from the box.

 

С Listening

 

■ advertising ■ constraints

■ information ■ mistakes ■ rational

 

1 Consumers are not always........................

2 Consumers often don't have enough

3 Choices are affected by........................

4 Consumers make........................

5 Budget.......................may not guide consumers'

choice.

 

Now listen and check your answers.

 

 

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Before you read _

Discuss this question with your partner.

What do you think a company has to spend money on? Make a last of you ideas.

 

D Vocabulary

■ interest	■ keep track of	■ loan
■ maintain	■ minus	■ nasty
■ part-time	■ rate	■ relationship
■ revenue	■	■ the short term

Complete each sentence with a word or phrase from the box.

 

1 I.......................what I spend by writing everything down in a notebook.

2 There is a.......................between the quality of a product and its cost.

3 Company's total.......................is all the money it receives from sales.

4.......................is the next few weeks or months The long term may be the next years or decades.

Five.......................three is two.

6 Factories have to.......................their machines keep them working properly.

7 A.......................worker works for only a few hours a day or a few days per week.

8 When someone or something is........................ they aren't nice at all.

9 If you borrow money from a bank, you have to pay it back with an extra charge which is called

10 When somebody lends money, they are giving a

11 The.......................at which something happens is how fast it occurs.

 

 

Costs and supply

Companies have to spend money in order to make

money. The money they spend to manufacture their goods or provide their services are called coats. Costs are important. Any company that doesn't keep track of costs will soon be in trouble. And there are many different kinds of costs to keep track of such as fixed costs and variable costs.

Why arc costs i mportant? Well, for two reasons Firstly, there is a relationship between costs and profit. Profit is overall revenue minus costs. Secondly, there is a relationship between costs and supply To understand this relationship, w e need to look at some types of cost.

 

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One type is fixed costs. Fixed costs are costs that don't change. They are costs that the company has to pay each month, for example, or each year. The value of fixed costs will not rise or fall in the short term. Examples include the rent the company pays, the interest they have to pay each month on any loans and the salaries they have to pay for permanent employees. The good news about fixed costs is that they don't change with increases in production. For example, imagine a company produces 1,000 pens in January and 2,000 pens in February. The rent for the factory remains the same for both months. Variable costs, however, change (vary) with the size of production. The more pens the company produces, the more these costs increase. Examples of variable costs are the raw materials needed for production, the cost of electricity and the cost of maintaining machines that are working more. Also, the company may need to get more part-time employees. Their hourly pay is another variable cost. In unit 1 we said that the price of a product or service increases as supply increases. Variable costs are the reason why.

In a perfect world, variable costs will increase steadily as production increases. This is called constant return to scale and it is shown in figure 3 on page 27. However, this is not a perfect world! Sometimes, variable costs rise at a faster rate than production. This nasty situation, which is called a dis-economy of scale, is shown in figure 4 on page 27. On the other hand, companies sometimes get lucky. Variable costs can rise at a much slower rate than production. This is called an economy of scale, and is shown in figure 5 below.

_

 

 

E Comprehension

Now read the text again and answer these questions in your own words in the space provided below.

1 What are costs?

2 Why are costs important?

3 What are fixed costs?

4 What are variable costs?

5 Why is an economy of scale good?

6 Why is a dis-economy of scale bad?

Notes:

 

Before you listen

Discuss the following with your partner.

Price is not only the cost of something. Every purchase has a hidden cost. What do you think this is?

F Listening)))

You're going to hear about another kind of cost called opportunity cost. Listen and choose the best answer for each question. Then listen again and check your answers.

 

1 What is opportunity cost?

A Something you have to give up in order to

have something else. В Something a company can charge people for

goods or services. С Something that companies pay when they first

start business.

 

2 What could be the opportunity cost of watching television?

A Getting sore eyes.

В The cost of buying a television.

С Not sunbathing in the garden.

3 What is the opportunity cost for Alice's decision?

A £3,000 В £39,000 С £13,000

 

 

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G Speaking

Discuss these questions with your partner.

How do you make decisions about what to buy?

Do you think people make rational decisions? Why/Why not?

 

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

Utility

Marginal

Revenue

Employee

Constraint

 

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 one 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 be a good purchase because, would be very useful for, first, next, in addition, finally

Sign off in a polite way

 

 

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Before you read_

Discuss the following with your partner.

Here 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 for companies

companies having the resources and technology they need

 

A Vocabulary

Choose the correct answer А, В or С from the list opposite.

 

1 Companies usually have a.......................with

senior managers at the top and employees at the bottom.

2 McDonald's has a very big.......................of the

fast food market.

3 Some teachers mark students work using a

.......................from A to E.

4 No one's work is We all make

mistakes

5 A perfect economic system may never

6 A.......................monopoly means an absolute or

complete monopoly.

7 Not all twins are........................Some twins are

brother and sister, for example.

8 Sometimes a person's colour or race can be a

.......................to getting work.

9 We use curtains to.......................light.

10 Countries have been.......................with each

other for thousands of years.

11 The.......................point is where two things are

balanced against each other.

12 Honey is a healthier.......................for sugar to

make things sweet.

Everyone should have.......................to education.

1A shape	1B structure	1C building
1A piece	2B part	2C market sham
3 A scale	2B point	3C grade
4A good	4B better	4C ported
5A is	5B live	5C exist
6A pure	6B good	6C clean
7A similar	7B identical	7C same
8A gate	8B barrier	8C block
9A barrier	9B close	9C block
10A shopping	10B trading	10C selling
11A equilibrium	11B middle	11C equal
12A difference	12B addition	12C substitute
13A access	13B openings	13C entrance

Reading 1(UNIT 6)