An increase in supply will result in a decrease in the market price.

Supply, which is the quantity of goods or services that sellers would offer for sale at all possible prices at a particular time and place, varies directly with price. In other words,-at a higher price, more goods and services will he offered for sale than at a lower one, and vice versa.

The price at which goods and services actually change hands is known as the equilibrium, or market price. It is the point at which the quantity demanded exactly equals the quantity supplied. Market price can be represented graphically as the point of intersection of the supply and demand curves.

Shifts in demand or supply will affect market price. When everything else is held constant, an increase in demand will result in an increase in market price, and vice versa. Similarly, an increase in supply will result in a decrease in price, and vice versa.

Vocabulary

to ration scarce resources - нормировать недостаточ­ные ресурсы

to motivate production - мо­тивировать производство

rationing effect of prices - нормирующий эффект цен

level of output – уровень производства

to encourage - поощрять

production-motivating fun­ction of prices — мотиви­рующая производство функция цен

to substitute for - заменять

diminishing marginal utility — уменьшение крайней полезности

shape and slope - форма и наклон

to triple - утроить

have a relatively large effect - иметь относительно большое влияние

revenue test - тест па до­ходность

item's price — цена изделия

shift — сдвиг, смешение

peanut butter and jelly — арахисовое масло и желе

complements - дополнения

availability — зд. наличие

occurred - имел место incentive - стимул

expectations - ожидания

to profit - получать прибыль

to decline - снижаться

actually - фактически

point of equilibrium - точ­ка равновесия

to prevail - преобладать

inversely - обратно пропор­ционально

Give answers to the following questions:

1. What roles do prices play in a market economy?

2. What affects the demand for goods and services in a market economy?

3. What affects the supply of a particular good or service?

4. How do demand and supply interact to determine prices?

5. How do shifts in demand and supply affect prices?

Приложение №1 3

FORMS OF BUSINESS ORGANIZATION

 

There are three principal forms of business organization:

1. the sole proprietorship;

2. the partnership;

3. the corporation.

Sole proprietorship

The simplest form of business organization is the sole proprie­torship, which is owned by one person. Many small businesses start out as sole proprietorships. The owner has relatively unlimited con­trol over the business and keeps all the profits. These firms are usu­ally owned by one person who has day-to-day responsibility for running the business. Sole proprietors own all the assets of the business and the profits generated by it. They also have complete responsibility for any of its liabilities or debts. In case of breach of contract the business property and personal assets of the owner may be taken to pay judgments for damages awarded by courts.

Sole proprietorships are the most numerous form of business organization. No charter and permit are needed and there are no particular, legal requirements for organizing or conducting a sole proprietorship. When started, many sole proprietorships are conducted out of the owner's home, garage, or van c-nd inventory may be limited and may often be purchased on credit.

Main Features of a Sole Proprietorship:

(+) Easy to organize

(+) Owner has complete control

(+) Owner receives all income

(-) Owner has unlimited liability

(-) Benefits are not business deductions

Partnership

In a Partnership, two or more people share ownership of a sin­gle business. Like proprietorships, the law does not distinguish be­tween the business and its owners. The partners should have a legal agreement that sets forth how decisions will be made, profits will be shared, disputes will be resolved, how future partners will be admitted to the partnership, how partners can be bought out, or what steps will be taken to dissolve the partnership when needed.

There exist different types of Partnerships:

1. General Partnership

Partners divide responsibility for management and liability, as well as the shares of profit or loss according to their internal agree­ment. Equal shares are assumed unless there is a written agreement that states differently.

2. Limited Partnership and Partnership with limited liability "Limited" means that most of the partners have limited liability (to the extent of their investment) as well as limited management decisions, which generally encourages investors for short term pro­jects, or for investing in capital assets. This form of ownership is not often used for operating retail or service businesses. Forming a limited partnership is more complex and formal than that of a gen­eral partnership.

3. Joint Venture

Joint Venture acts like a general partnership, but it is formed for a limited period of time or a single project.

Main Features of a Partnership:

(+) Easy to organize, but needs agreement

(+) Partners receive all income

(-) Partners have unlimited liability

(-) Partners may disagree

(-) Life of business may be limited

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