C. The third one is the economic situation of the world market that takes into account the scale and degree of business activity and the level of commercial risk.

By business activity we mean the business cycle as a well-observed economic phenomenon, though it often occurs on a generally upward growth path and has a variable time span, typically of the order of five years.

 

By commercial risk we mean a state in which the number of possible future events exceeds the number of events that will actually occur, and some measure of probability can be attached to them. This definition distinguishes risk from uncertainty, in which the probabilities are unknown. A gambler, for example, faces risk because he could either be very much richer tomorrow than he is today or (more likely) slightly poorer, depending on whether a roulette wheel spins the ball into the right hole — and he knows the odds of the roulette wheel.

 

It is normally assumed that economic agents dislike risk (risk aversion) and in the market for financial assets the riskier an asset, the higher the expected return investors will require of it. Risk assessment has been promoted as a means of preventing economic activity which creates more dangers than are reasonable. But perhaps more importantly, it can prevent the error of creating “too much safety” — the imposition of costly safety mechanisms that reduce risks less than is worthwhile, given the cost. Economists argue that it is not worth investing millions of pounds (or dollars) in, say, a rail safety system, if it is expected to save one life a year, if the money could have saved more lives when invested elsewhere.

 

The level of competition, the stage of economic development of the market and many other factors are of great significance.

 

The market value and the quantity (volume) of the output of goods, the dynamics of the production changes in the main producing countries are given a lot of heed in determining the economic situation.

 

It is the analysis of a great number of these inconsistent factors that allows to examine the economic situation in the world market.

 

Economic situation research

Vocabulary list:

1. conjuncture (economic situation, state of the market, market situation, or economic conditions) — конъюнктура

2. equilibrium (balance) — равновесие

3. supplier — поставщик

4. equilibrium price — равновесная цена

5. toundercut — сбивать цены; продавать по более низким ценам, чем конкурент

6. marginal cost — предельная стоимость

7. business activity — деловая активность

8. gambler — игрок

9. riskaversion— нежелательный риск, нерасположенность к риску

10. return — прибыль (доход)

11. forecast — прогноз

12. trend — тенденция

 

Notes:

1. the market equilibrium (balance) — сбалансированностьрынка

2. the demand and supply relation — соотношение спроса и предложения

3. the higher the price, the more profitable it is... — чемвышецена, темвыгоднее...

4. equilibrium in the market — равновесиенарынке

5. the actions... are mutually consistent — действия... взаимносогласованы

6. any variable — любое переменное

7. countervailing forces — уравновешивающиесилы

8. 8.price-setting — установлениецены

9. to manifest — проявлять, показывать

10. advance — продвижение

11. compatible strategies — совместимыестратегии

12. tobecontentwith — довольствоваться чем-либо

13. commercial risk — коммерческий риск

14. the scale and degree of business activity — масштабистепеньделовойактивности

15. measure of probability — мера вероятности

16. marketsituationsurvey — конъюнктурные исследования,

 

 

Ex 1. Work with a partner and discuss these comprehension questions on Text 1.

1. What is meant by the ancient Latin term “conjuncture”?

2. What factors characterize the economic situation (market situation)?

3. What is the aim of studying the market situation?

4. What do we mean by the market equilibrium?

5. How does the market mechanism of demand-oriented pricing (установлениеценнаосновеизученияспроса) operate?

6. How do you understand the concept of equilibrium?

7. Why is it necessary to determine a trend of the market situation development?

8. What should be taken into account in analyzing the world market situation?

9. How can the level of commercial risk affect the market situation?

10. How can the expediency (risk) of investing in capital-intensive megaprojects (капиталоемкиекрупномасштабныепроекты) be judged? (Give an example from the text on a rail safety system or any other one of your own.)

11. Does the level of competition affect the market situation? Give a few examples, if you can.

12. What should be taken into consideration in forecasting the market value and the quantity (volume) of the output of goods?

13. What would you refer to the main market situation forming factors?

14. What is the conjuncture survey based on?

Ex 2.Find the English equivalents in Text 1.

• конъюнктура рынка, или рыночная конъюнктура

• конкретная экономическая ситуация

• рыночная ситуация

• степень сбалансированности рынка (соотношение спроса и предложения)

• равновесие рынка

• тенденция развития рынка (ситуации)

• уровень конкуренции

• масштаб рыночных операций

• стратегия внешнеэкономической и внешнеторговой деятельности

• масштаб и степень деловой активности

• фактор (уровень) коммерческого (рыночного) риска

• стадия экономического или сезонного цикла

• изучение и прогнозирование стоимости объекта

• динамика производства

• продолжительность воздействия (факторов)

• предсказуемость и управляемость

• направленность воздействия (стимулирующие или сдерживающие факторы)

• конъюнктурные исследования

Ex 3. Explain in English the meanings of the following words and expressions.

• the market equilibrium

• equilibrium price

• a dynamic equilibrium

• the trend of a situation development

• commercial risk