Lesson 1

Today's Lesson Objectives: - - - - - - ----

Vocabulary: Identify vocabulary collocations or 'chunks'
Reading Skills: Make inferences and paraphrase as you read
Combined Skills: Combine the information from two sources to create a written
summary
Grammar in Use~ ldentify and use verbs that take gerunds as direct objects

Reading Skills
~Warm Up
Directions: Read the following short paragraphs and answer the questions that folio. ·

Paragraph 1

A monopoly can be defined as an industry that offers only one supplier of a

product or service, and in which some sort of barrier exists preventing the
entry of any similar suppliers. Often, monopolies are legal. A typical barrier
in a legal monopoly is a patent, a right given by the government to those who
invent new goods to be the sole distributors of their invention for a certain
period of time.

1. Which of the following sentences is supported by paragraph 1? Cirde it.

(A) Some monopolies are against the law.

(B) A patent is the only type of legal barrier in a monopoly.

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Paragraph 2

The U.S. Post Office is an example of another type of barrier in a legal

monopolistic market structure, the public franchise. Public franchise barriers
come into being when the government, for whatever reason, decides that a
service or product should not be supplied by more than one company. The
U.S. Post office is the only supplier of first class mail delivery.

2. Which of the following sentences is supported by paragraph 2? Circle it.

(A) The U.S. Post Office is the only supplier of mail delivery in America.
(B) The government does not necessarily choose to allow a public franchise for the
sarne reason each time.

Paragraph 3

Doctors, teachers, and lawyers are among those who represent a govern-
ment license barrier. The government license barrier limits entry into a field
by requiring applicants to pass a test before being allowed to legally seek a
job. lt might be assumed that this type of barrier is often put into effect for
those occupations in which it is necessary to dispense advice, whether med-
ical or educational, to others; therefore, this type of barrier is meant to pro-
tect the general public from misinformation.

3. Which of the following sentences is supported by paragraph 3? Circle it.

(A) Veterinarians probably have to pass a test before being allowed to legally seek a
job.
(B) No teacher or lawyer gives incorrect information thanks to government license
barriers.

4. Which of the following sentences is supported by information from ali three of these
paragraphs? Circle it.

(A) ln a legal monopoly, barriers are created by the government.

(B) Of the three types of barriers mentioned, patents are the most prevalent.

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 Academic English Skills

Reading Skills

....-aefore Vou Read

Directions: Look at the word collocations, or 'chunks', below. Find another word in the
passage "Types of Market Structures" below to complete each list, and then use a dictionary
to make sure you understand the meaning of all the words and phrases. The paragraph in
which you will find the missing word has been noted for you.
1. a topic is ...
covered
ex2lored
dealt with
broached
(paragraph 1)

2. a ...case
criminal

divorce
landmark
(paragraph 1)

3. ...represented
accurately

falsely
widely (paragraph 1)

4. a ... feature
central

distinctive
key
(paragraph 2)

5. a ...number
record

considerable
small (paragraph 2)

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Reading Skills

6. act ...
decisively

responsibly

_ _ _accordingly
_ _ _ _ _ (paragraph 3)

7. stand ...
up

b
out (paragraph 4)

8. ... aniche
identity

fill
find (paragraph 4)

9. a gimmick you can ...

market

use
exploit
(paragraph 4)

10. a/an ... price

average

bargain
exorbitant
___ _ _ _ _ _ (paragraph 6)

Reading for lnferences and Paraphrasing

Directions: The passage that follows discusses an economics topic in a fairly typical
classificatory style; that is, items or ideas are placed into categories- classified- according
to their similar characteristics. Read the passage and answer the questions that follow.
 Academic English Skills

Reading Skills

Types of Market Structures

Though it is the extremes of perfect competition and monopolies that usu-

ally spring to the minds of Economics 101 students when the topic of mar-
ket structure is broached, the experienced economist knows that such
extremes are rare in the real world. Due to the antitrust laws, laws made
famous by landmark cases involving companies like AT&T and Microsoft,
true monopolies are typically short-lived. Perfect competition is equally unre-
alistic since it is not in the best interest of firms. This is because, among
other things, perfect competition requires ali firms to manufacture identical
products and does not allow any one firm to have an advantage over anoth-
er. Seeking advantages over other companies, by product differentiation or
any other method, is a key objective for all firms. Therefore, it is neither per-
fect competition nor monopolies that represent the majority of America's
companies today. Several less drastic types of market structure are more
widely represented.

The oligopoly is one common market form in the United States. A simple
method of determining whether or not a market is an oligopoly is to find out
if over 40 percent of it is controlled by a few firms. More generally, what char-
acterizes this type of market amounts to several key features: a small num-
ber of producers and an industry into which it is difficult for competitors to
enter. The air transportation industry can be classified as an oligopoly
because there are a finite number of air service suppliers and because it is
nearly impossible to establish an airline company. The start-up cost is so
great that most people simply could not afford it. Beer and cigarette pro-
ducers, along with gas, steel, and aluminum suppliers, are a few other exam-
ples of oligopolies.

Oligopolies are also characterized by interaction between the competitors.

As there are few of them, they are almost always aware of each others'
plans and strategies, and must act accordingly. lf one competitor introduces
a new product, say a strawberry-flavored cola, the others will quickly devel-
op a similar beverage. lf a competitor raises or lowers prices, the others will
more often than not follow suit. On the surface, then, oligopolies allow
choice, an element missing from a monopoly, but in reality, consumers have
little purchasing freedom. Yet another problem for buyers is that of price- fix-
ing. Competitors in an oligopoly can easily agree to set their prices high, cre-
ating an economic situation that is almost the sarne as a true monopoly.

One more common type of market structure, monopolistic competition, is

highly evident in the retail industry. For instance, imagine you want to open
a restaurant. What will make your restaurant stand out from the hundreds or
even thousands that already exist in your city? To be successful, it's impor-

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tant for you to find a niche that has yet to be filled, or a gimmick you can
exploit. You might choose to offer bizarre fusion recipes, to decorate your
restaurant in a unique theme, or to expect your servers to wear funny cos-
tumes. AII of these techniques are meant to attract customers, making them
forget that you are giving them essentially the sarne product they will receive
if they frequent any other restaurant: food.

Unfortunately, due to the rapidity with which consumers become bored with
many products, and because of the high expenses of advertising necessary
to beat the abundant competition, monopolistically competitive firms receive
only short-term, not long-term, profits. For this reason, many companies in
this type of market go bankrupt within a short period of time. lf you think of
that corner restaurant in your neighborhood that has changed names half a
dozen times, you will understand that firms in monopolistic competition dis-
appear as quickly as they arrive. The most important components of this
type of market structure are thus accelerated entry and exit, the large num-
ber of firms, and the necessity of product differentiation.

Neither form of common market is particularly beneficial to consumers, at

least when compared with perfect competition; on the other hand, neither is
quite as harmful as pure monopoly. Being limited to Pepsi or Coca-Cola, or
worrying that our favorite boutique might soon go out of business, is prefer-
able to being forced to pay an exorbitant price for a low-quality product.
Government regulation of business may seem odd in a capitalistic society
like the United States, but it leads to an economy dominated by two less
extreme types of market structure, ultimately benefiting the consumer.

1. Describe the main idea of the text in your own words.

The text agues that there is not a perfect competition in the marketing, and the government

regulation aims to avoid the existence of monopolies.

2. Look at two of the topic sentences from the text. Rewrite them using your own words.

The oligopoly is one common market form in the United States.

One more common type of market structure, monopolistic competition, is

highly evident in the retail industry.
In the United States oligopoly is an usual practice of market.

The monopolistic competition is really common in the reatail industry

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