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TEXT 1

 

THE PRICE OF RELATED GOODS

Suppose, we study the demand for tube travel. A rise in bus fares or petrol prices would increase the quantity of tube travel demanded at each possible price. In everyday language, we think of buses and private cars as substitutes for the tube. Loosely speaking, this means that a journey may be made by bus or by car instead of tube. More precisely, an increase in the price of buses or cars will lead to an increase in the demand for tube travel. Economists use an even more precise definition of substitutes but everyday language gives the right idea of what we mean. Similarly, everyday language suggests that petrol and cars are complements because you cannot use a car without also using petrol. A rise in the price of petrol tends to reduce the demand for cars.

How do these ideas about substitutes and complements relate to the demand for chocolate bars? Clearly, other sweets (mint drops and jelly babies) are substitutes for chocolate. We expect an increase in the price of other sweets to increase the quantity of chocolate demanded at each possible chocolate price, as people substitute away from other sweets towards chocolate. If people buy chocolate to eat at the cinema, films would be a complement for bars of chocolate. A rise in the price of cinema tickets would reduce the demand for chocolate since fewer people will go to the cinema. Nevertheless, it is difficult to think of a lot of goods that are complements for chocolate. This suggests, correctly, that most of the time goods are substitutes for each other. Complementarity, while present in many instances, is usually a more specific feature (record players and records, coffee and milk, shoes and shoelaces).

Before we leave the influence of prices of related goods on the demand for a particular commodity, it should be noted that the development of new products can be viewed within this framework. Technological advances that make possible hand calculators, low fuel consumption cars, or low-calorie beer affect the demand for related goods. One way to think about this is to say that the new product had always been available, but previously its price had been prohibitively high so that nobody could afford it. The technological advance enables the new product to be available at a much lower price. This will stimulate demand for goods that are complements to the new product (video games may increase the demand for television on which they can be played in the home) but reduce he demand for substitutes for the new product (being able to watch films on a home video reduces the demand for going to the cinema).

 

VII. Найдите в тексте ответы на поставленные вопросы.

1. What is the relation between bus fares or petrol price and the quantity of tube travel?

2. What is the relation between buses and private cars and the tube?

3. Why is petrol a complement for a car?

4. What are substitutes for chocolate bars?

5. Why can films be a complement for chocolate bars?

6. How do technological advance affect the demand for complements to a new product?

7. How do technological advance affect the demand for substitutes to a new product?

8. What happens to the demand for normal goods when consumer incomes rise?

 

VIII. Подчеркните в тексте предложения, соответствующие по смыслу данным ниже:

1) Увеличение платы за автобус или цены на бензин приводит к увеличению спроса на метро.

2) Автобусы и частные машины являются заменителями метро.

3) Машины и бензин дополняют друг друга, т.к. нельзя использовать машины без бензина.

4) Многие вещи взаимно дополняют друг друга, как, например, проигрыватели и пластинки, кофе и молоко, ботинки и шнурки, так что это явление очень часто встречается.

5) Так как цены на сопутствующие товары влияют на спрос на определенный товар, то разработки новых товаров можно рассматривать с этой точки зрения.

 

IX. Изложите краткое содержание текста на английском языке в письменной форме.



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