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ESSENTIAL VOCABULARY
1. Anticipate v to imagine or expect that something will happen ,
, . Syn. to expect, to hope, to predict, to foresee.
2. Charge v to impose or ask somebody for an amount of money as a price or fee
, , . To charge a price . Syn. to
establish, to fix, to set.
3. Set v to decide and state when something will happen, how much something should
cost, what should be done etc , , , .
To set a price , Syn. to determine, to establish.
4. Shift n the act of moving from one position, place, direction, or condition to another
, , . Shift in demand/supply
/. Syn. a change.
5. Supplier n a company or a person that provides things that people want or need,
especially over a long period of time . Syn. a provider, a producer, a seller.
6. Supply v to make available something that is wanted or needed by somebody or
something often in large quantities and over a long period of time ,
, , . To supply the demand ,
to supply a need , to supply a service , to
supply goods to , to supply with something .
Syn. to furnish, to provide, to sell.
7. Switch (from something to something) v to change suddenly or completely,
especially from one thing to another, or to exchange by replacing one thing with another
, , . To switch over production
/ . Syn. to shift, to transfer.
Text
Transactions require both buyers and sellers. Unlike demand that describes the behavior of
consumers supply refers to the behavior of sellers. Thus, demand is only one aspect of
decisions about prices and the amounts of goods traded, the other is supply. So, supply is
one of the two key determinants of price. The theory of supply explains the mechanisms by
which prices and levels of production are set.
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In economics, supply relates to the quantity of goods or services that a producer or a
supplier is willing to bring into the market at a particular price in a given time period, all
other things being equal.
The law of supply states that the quantity of a commodity supplied varies directly with its
price, all other factors that may determine supply remaining the same. The law of supply
expresses the relationship between prices and the quantity of goods and services that sellers
would offer for sale at each and every price. In other words, the higher the price of a
product, the higher the quantity supplied. As the price of a commodity increases relative to
price of all other goods, business enterprises switch resources and production from other
goods to production of this commodity, increasing the quantity supplied.
Clearly the law of supply is the opposite to the law of demand. Consumers want to pay as
little as they can. They will buy more when there is a price decrease in the market. Sellers,
on the other hand, want to charge as much as they can. They will be willing to make more
and sell more as the price goes up. In this way they can maximize profits.
The relationship between price of a product and its quantity supplied is represented in a
table called a supply schedule. The supply curve is a graphic representation of the market
supply schedule and the law of supply. Each point along the supply curve represents a
different price-quantity combination, showing a direct relationship between the quantities of
products that firms are willing to produce and sell at various prices, all non-price factors
being constant. Sloping upward from left to right the supply curve reflects that producers
supply more at a higher price and less at a lower price.
Supply schedule for cut jeans
Price The quantity supplied
$400 3000
$350 2400
$300 1600
$225 1200
$175 800
$100 500
$50 200
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The supply curve enables producers to anticipate what the supply would be for those prices
falling in between the prices that are in the supply schedule.
People often confuse supply with the quantity supplied. The difference between supply and
quantity supplied is that
Supply represents the amounts of items that suppliers are willing and able to offer for
sale at different prices at a particular time and place, all non-price determinants being equal.
The quantity supplied refers to the amount of a certain product producers are willing
to supply at a certain price. A change in the price of the product will cause a change in the
quantity supplied.
Price is an important determinant of the quantities supplied. The law of supply states that
the amount offered for sale rises, as the price is higher. The quantity of pairs of cut jeans
producers are willing to offer for sale rises, since their price is higher primarily because they
need to cover the increased costs of production.
However, there are things other than price which affect the amounts of goods and services
suppliers are able to bring into the market. These things are called the non-price
determinants of supply.
As it has been mentioned a change in the quantity supplied caused only by a change in the
price of the product. A change in supply is caused by a change in the non-price determinants
of supply. They are:
Changes in the cost of production. Production costs relate to the labour costs and
other costs of doing business used in production process. The cost of production is probably
one of the most important effects on production process. An increase in the costs of any
input brings about the lower output. Regardless of the price that a firm can charge for its
product, price must exceed costs to make a profit. Thus, the supply decision is a decision in
response to changes in the cost of production.
Changes in technology. Changes in technology usually result in improved
productivity. Improved technology decreases production costs and therefore increases
supply.
Changes in the price of resources needed to produce goods and services. If the
price of a resource used to produce the product increases, this will increase the production
costs and the producer will no longer be willing to offer the same quantity at the same price.
He will want to charge a higher price to cover the higher costs.
Changes in the expectations of future prices. Changes in producers' expectations
about the future price can cause a change in the current supply of products. If producers
anticipate a price rise in the future, they may prefer to store their products today and sell
them later. As a result, the current supply of a particular product will decrease.
Changes in the profit opportunities. If a business firm produces more than one
product, a change in the price of one product can change the supply of another product. For
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example, automobile manufacturers can produce both small and large cars. If the price of
small cars rises, the producers will produce more small cars to earn higher profits. They will
shift the resources of the plant from the production of large cars to the production of small
ones. Therefore, the supply of small cars will increase and a supply curve will shift outward.
So, profit opportunities encourage producers to produce those goods that have high prices.
Changes in the number of suppliers in the market. Potential producers are
producers who can produce a product but dont do it because of relatively low price. If price
of a product rises potential suppliers will switch over production to that product to make
more profit. If more producers enter a market, the supply will increase, shifting the supply
curve to the right.
Making a summary it is necessary to emphasize that the understanding of concepts of
supply and demand provides an explanation of how prices are determined in competitive
markets.
An important concept in understanding supply and demand theories is elasticity.
Comprehension of elasticity is useful to understand the response of supply to changes in
consumer demand in order to achieve an expected result or avoid unforeseen consequences.
In economics, the price elasticity of supply is the degree of proportionality with which the
amount of a commodity offered for sale changes in response to a given change in the going
price. In other words elasticity of supply is a measure of how much the quantity supplied of
a particular product responds to a change in the price of that product.
Elasticity of supply works similar to elasticity of demand. Supply is elastic if a change in
price results in a large change in the quantity supplied. On the other hand, if a great change
in price brings about a small change in the quantity supplied, supply is called inelastic.
There are some factors that determine price elasticity of supply. The most important of them
are the ability of producers to change the amount of goods they produce, time period needed
to alter the output and others.
Exercise 1. Read, translate into Ukrainian in written form and memorize the definitions of the
following economic terms and concepts.
1. Elastic supply: Supply for which a _______________________________________________
percentage change in a product's price _______________________________________________
causes a larger percentage change in _______________________________________________
the quantity supplied. _______________________________________________
2. Elasticity of supply: The degree to _______________________________________________
which supply of a commodity responds _______________________________________________
to a change in that commoditys price. _______________________________________________
3. Inelastic supply: Supply for which _______________________________________________
a percentage change in a product's _______________________________________________
price causes a smaller percentage _______________________________________________
change in the quantity supplied. _______________________________________________
4. Law of supply: the economic law _______________________________________________
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that states as the price of a commodity _______________________________________________
that producers are willing and able to _______________________________________________
offer for sale during a particular _______________________________________________
period of time rises (falls), the quantity _______________________________________________
of the commodity supplied goes up _______________________________________________
(decreases), all non-price determinates _______________________________________________
being equal. _______________________________________________
5. Quantity supplied: the amount of a _______________________________________________
product that producers are willing and _______________________________________________
able to sell at a certain price during a _______________________________________________
time period, all other factors that may _______________________________________________
determine supply remaining the same. _______________________________________________
6. Supply: the total amount of a _______________________________________________
commodity available for purchase by _______________________________________________
consumers. _______________________________________________
7. Supply curve: the graphical _______________________________________________
representation of how supply varies as _______________________________________________
prices change. _______________________________________________
8. Supply schedule: a table showing _______________________________________________
the quantities of a product that would _______________________________________________
be offered for sale at various prices at _______________________________________________
a given time. _______________________________________________
Exercise 4. Match these nouns/noun phrases, prepositions (if necessary) and nouns/noun phrases
as they occur together in the text. Translate the expressions they make into Ukrainian.
1. an increase items
2. decisions opportunities
3. each point period
4. expectations the law of demand
5. the amounts prices and the quantity of goods
6. the opposite the curve
7. the profit the future price
8. the relationship prices
9. time the quantity supplied
Exercise 5. Match the verbs/verbal phrases, prepositions (if necessary) and nouns/noun phrases as
they occur together in the text. Translate the expressions they make into Ukrainian.
1. to be caused improved productivity
on
2. to bring a price cut
with
3. to charge sale
into
4. to offer a higher price
in
5. to reckon its price
for
6. to result by a change in the non-price determinants
7. to vary directly the market
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Exercise 6. Copy out from the texts the sentences containing the following words and word-
combinations and translate these sentences into Ukrainian.
the amounts of goods traded: ________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
is willing to bring into the market: ____________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
business enterprises: _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
a direct relationship: _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
must exceed costs: ________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
to store their products: _____________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
a business firm: __________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
to achieve an expected result ________________________________________________________
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________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
responds to a change ______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Exercise 7. Choose from the box the words and word-combinations having the same or similar
meaning to the words listed below. More than one is possible.
1. (2)
2. (2)
3. (3)
4. , (3) ____________________
______________________________________________________________________________
5. (2)
6. (2)
7. / (3) _________________________________________________
8. (3)
9. (3)
10. (3)_________________________________________________________
11. (3)
12. (2)
13. (2)
14. (3)
15. (3) ______________________________________________________
all non-price factors being constant to supply the demand an unforeseen consequence
an anticipation a price increase an unpredicted effect a change a producer
to offer for sale to provide the present supply to furnish
the current supply to fix a price to meet the demand to expect a supplier
an expected result to foresee to put on the market a shift a rise in price
a provider to relate to an unanticipated influence to show to predict
to charge a price an expectation to respond to the demand to supply to set a price
to refer to to represent all other things being equal an anticipated effect
Exercise 8. Replace the words or word combinations in bold type with their synonyms.
1. A supply curve slopes upward from left to right, reflecting the fact that more of a product will be
brought into the market at a higher price and less at a lower price.
2. According to the law of supply an increase in supply leads to a reduced price, while a decrease in
supply causes a rise in price, demand remaining constant.
3. As a result of a shift in supply, there will be a new relationship between the price and quantity of
a commodity supplied.
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4. Since it costs more to produce additional items, producers will supply more only if they can
charge a higher price.
5. Potential producers switch resources to production of a particular product, if its price increases,
and enter the market for that product to maximise their revenues.
6. Changes in suppliers expectations cause supply curves to shift.
7. Companies that operate in highly competitive industries provide goods or services that are very
elastic because current market condition does not enable them to charge a price they would like to.
8. Supply along with demand is one of the two key determinants of price but relates to the total
amount of the goods available for purchase.
Exercise 11. Pair the halves of the sentences and write the completed sentences. Translate them
into Ukrainian.
1. Supply represents a. more at a higher price.
2. According to the law of supply the higher b. that results from a one percent change in
the price is, the price of the good.
3. The supply curve shows how sellers alter c. the supply also increases shifting a supply
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their plans curve to the right.
4. Buyers will be supplied with less amounts d. the more goods will be put on the market.
of goods at a lower price and
5. Quantity supplied refers to the quantity e. at each quantity there will be a new price.
6. A change in supply is a change in the f. in response to a change in one of the non-
quantity of a product that suppliers plan to sell price determinants, the good's price being
constant.
7. Supply decreases or increases depend on g. the supply also increases shifting a supply
curve to the right.
8. A change in supply is represented by a h. that producers are willing and able to sell
shift of the supply curve at a particular price.
9. At each price there will be a new quantity i. the cost of production.
and
10. As the number of sellers in a particular j. how much the market can offer for sale.
market increases,
11. The price elasticity of supply is the k. that results from a change in a condition
percentage change in the quantity supplied of other than a products price.
a good
Exercise 12. Match each term in column A with its definition in column B.
A B
1. Elastic supply a. A measure of the responsiveness of a commoditys quantity supplied to
changes in that commoditys price
2. Elasticity b. A table recording the number of units of a commodity supplied at
various possible prices.
3. Inelastic supply c. The number of items that sellers will put on the market at each and
every price at a particular time and place.
4. Law of demand d. A graphic representation of the supply schedule and the law of supply
showing the relationship between each possible price of the good and
the quantity that would be supplied for sale at that price.
5. Law of supply e. A term used when the percentage change in a product's price causes a
smaller percentage change in quantity supplied.
6. Price elasticity of f. It refers to how supply and demand change in response to various
supply influences.
7. Quantity supplied g. A term used when the percentage change in a product's price causes a
larger percentage change in quantity supplied.
8. Supply h. The economic law under which demand represents a direct relationship
to price. If all other factors remain unchanged, an increase in demand
leads to an increased price, while a decrease in demand leads to a
decreased price.
9. Supply curve i. The economic law under which supply reflects an inverse relationship
to price. If all other factors are equal, an increase in supply causes a
decreased price, while a decrease in supply causes an increased price.
10. Supply schedule j. The amount suppliers are willing and able to offer for sale at a certain
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price during a given period of time, all non-price factors being constant.
1 2 3 4 5 6 7 8 9 10
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