Economics study

Discuss these questions with your partner.

Do you know any industries where a monopoly exists?

What are the benefits or drawbacks of having a monopoly in that industry?

 

Task

 

Give a two-minute summary of what perfect competition is. First, read text 1 again and make notes below on the following and then present the talk to your class.

What is perfect and imperfect competition?

What is needed to make perfect competition possible?

Why is it very difficult to create perfect competition?

 

Notes:

 

H Writing

 

Answer this essay questions: What do economists mean by market structure? What kinds of market structure exist? How do different market structures affect consumers?

 

Essay about market structure

Use this plan to help you.

PARAGRAPH 1

Introduction. What is market structure?

Useful words and phrases:

compete, competition, market share, control over price

PARAGRAPH 2

Explain perfect and imperfect competition.

Useful words and phrases:

company size, market share, perfect substituter. perfect information, barriers, access

PARAGRAPH 3

Explain monopolies.

Useful words and phrases:

pure monopolies, natural monopolies, economy of scale, takeover, legal monopolies

PARAGRAPH 4

Say how market structure affects consumers.

Useful words and phrases:

price makers and price takers, variety and consumer choice, quality

PARAGRAPH 5

Conclusion. Sum up in a few words what market structure is and how it affects consumers.

Write 200-250 words

Pronunciation guide

Access

Identical

Monopoly

Affect

Barrier

Equilibrium  

Occur

Vertically

Horizontally

 

 

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Before you read

 

Discuss these questions with your partner.

In what situation(s) do you think a worker can ask for a lot of money?

In what situation(s) can an employer pay less money to workers?

 

A Vocabulary

 

Match the words with the definitions.

1 take on

2 obey

3 untility

4 output

5 compromise

6 productivity 7 afford

8 staff

A employees B satisfaction or usefulness

C be able to buy

D follow

E amount produced in a certain time

F employ more staff

G both sides give up something in order to agree

H what a company produces

 

The labour market

 

In many ways the relationship between employers and workers is similar to the relationship between consumers and producers; workers offer a service (the labour they provide), employers buy that service at a price they can afford (the wages they pay ). As you can see, it's a kind of market .In economics, it's called the labour market.

In any market for products and services,

consumers try to get the maximum utility, or satisfaction, from their purchase This is the same in the labour market What do companies want from their purchase of labour? What utility do they get? The answer is increased output.

Output is how much of the product OS service the company produces. If there is an inerease in demand for their product, they will need to increase output. One way to do this (but not the only way  is to take on more staff. Another is to ask staff they already have to work more hours .In both eases, the company is buying more labour.

Just like any other market, the labour market

obeys the laws of supply and demand. The demand is the employers' need for labour Supply is the labour workers provide .Just like any other commodity, there is a relationship between price and demand. As the price of labour increases,

the demand decreases .You can see this shown in figure 1.

The suppliers in the labour market are workers. Just like suppliers in other markets they want a

 

 

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higher price for greater supply. In other words, as supply of labour inereases. they want higher wages. Again, you can see this shown in figure 1. The wage that workers act for their labour is a compromise between what they want and what companies will pay. This is the point where the lines cross in figure 1.

However, there can be shifts in demand. These shifts can cause the overall demand for labour to increase or decrease at any wage rate. For example, if there is an increase in the demand for the end product or service, there will be an overall increase in demand for labour (the demand curve shifts to the right). However, if new technology can replace workers, (hen there will be an overall decrease in demand for labour (the demand curve shifts to the left).

One more thin, which affects demand for labour is workers' productivity, The productivity of a worker is how much they produce in a certain time. For example, imagine that a worker makes ten pencils an hour one day. and only eight pencils an hour the next day. This is a fall in productivity When worker productivity falls, companies will pay less for labour. They are also less likely to employ new workers.

 

 В Comprehension

 

Now read the text again and complete the sentences below in your own words in the space provided.

 

1 The labour market is similar to ...

2 Companies buy labour because they ...

3 Workers want higher...

4 When the price of labour rises ...

5 Four things that cause a change in demand for labour are...

Notes:

 

Before you listen_

 

Discuss this question with your partner.

What makes workers more or less productive?

 

 С Listening )))

 

Now listen to someone talking about one thing which affects productivity: the law of diminishing returns. Listen and choose the chart А, В or С which best illustrates this law.

 

 

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Before you read_

 

Discuss this question with your partner.

What would influence whether you want to work or not? Think about:

wages

free time

where job situated

health

 

 D Vocabulary

 

Complete each sentence with a word or phrase from the box.

■ balance	■ compensation	■complex
■ influences	■ leisure	■ play a/an
■ rate	■ role	■ skills
■ substitution	■ switch off

 

               

1At the weekend everyone needs to relax and .......................from school or work.

2Employers.......................important

.......................in the economy.

3......................is what you receive if you are badly

affected by something.

4......................means replacing one thing

with another.

5Most people's......................time is at the

weekend and in the evenings.

6 It can be difficult to get the right......................

between work and free time.

7 The money you can earn......................people's

choice of job.

8 Some economic problems are very......................

 There is no easy solution.

9 The hourly......................for this job is seven

pounds an hour.

10 The ability to speak foreign languages is one of the......................needed for this job.

 

Reading 2

 

Supply of labour

 

Why do people work? To make money, of course. However, nothing in economics is ever that simple. The economist will ask a further question: how much are people prepared to work- The answer to this question is much more complex. Finding the right balance between work time and leisure time is one of the trade- offs we have to make in life. The balance each person chooses depends on a number of things.

First of all. there are natural limits. There are only 24 hours in a day. and we can't spend all of them working. Most people need eight hours sleep. That brings the number of hours we can spend on work or leisure down to l<>. None of us are robots, so we all need some time to rest and switch off from work. This also brings down the possible number of working hours.

Then, of course, money plays a role. The way money influences working hours, though, is quite complicated. It can be separated into two effects: the income effect and the substitution effect.

 

 

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The income effect works like this: People's time is a resource. It they give up that resource for work, they need compensation. This is usually in the form of a wage for hours worked. The more compensation they gel for each hour worked, the less they will need to work People with higher rates of pay (wages) can afford to have more

leisure time than people on lower rales of pay.

So far. so good. However, are people happy just silling at home and enjoying themselver? It depends on what they'll lose. In other words, it depends on the opportunity cost of not working. As the hourly rate for work increases, the cost of not working also increases. This means that as the wage rale increases, people want to work more hours. This is called the substitution effect. But the substitution effect also has a limit. Eventually, people will not work more hours, no matter how

good the compensation is.

A good wage rate clearly attracts more workers. and encourages them to work longer hours.

However, the strength of this relationship depends

on how clastic the labour supply is. Sometimes it is difficult for companies to find a certain kind of worker. Perhaps there are not many people with the necessary skills. Or perhaps the company is in a place where there are not many available workers. In these situations, even if employers double the wage rate, they will only attract a small

number of extra workers. The labour supply is

ineclastie. In the opposite situation, when it is easy for companies to find workers, the labour supply becomes clastic.

 

 E Comprehension

 

Now read the text again and choose the sentence which best summarises each paragraph.

PARAGRAPH 1

A People generally spend equal amounts of

time on work and leisure,

 B People have to make compromises.

С People work in order to have leisure time.

PARAGRAPH 2

A There are only a limited number of hours

available for working.

В Everyone works about 16 hours.

C People can only work up to 24 hours a day.

 PARAGRAPH 3

A You have to work more hours to make more money.

B Earning a good wage allows you to spend less time working.

C Some people get paid in their leisure time.

 PARAGRAPH 4

A If you work more, you earn more

В If your wage is bad, you will want to

work more.

C If your wage is good, you will want to

work more.

PARAGRAPH S

A Sometimes it's hard to attract workers.

В Sometimes workers don't want more money.

C Elastic labour markets are more common than  inelastic labour markets.

 

Before you listen_

 

Discuss these questions with your partner.

Why are some jobs paid better than others?

Why do some people get paid more than others for doing the same job?

 

F Listening )))

 

Now listen to someone answering these questions. You will hear four reasons for differences in pay. What are they?

 

 

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G Speaking

 

Discuss these questions with your partner.

 Do people only work for money?  What other motivation is there to work?

 

Task

 

Give a two-minute talk on how supply and demand work in the labour market.

First, read the texts again and make notes below on the following.

How is the labour market just like any other market?

What affects demand for labour? What affects the supply of labour? What motivates people to work?

 

 H Writing

 

You have seen this job advertised in a newspaper. Write a letter of application for the job.

Required: Summer Camp Team Leader

We are looking for suitably qualified and experienced team loaders for our summer camps for young children (aged seven to twelve). Children come from all over Europe to our camps and take part in a variety of outdoor activities (camping, canoeing, climbing, trekking, etc).

Suitable candidates should have proven experience of working with this age group and have the necessary skills and qualifications.

Send letters of application to:

Ms Gibson

Summer Fun Camps

Wayfield

Norfolk

England

 

Letter of application

Use these notes to help you.

PARAGRAPH 1

Say why you're writing and where you saw the advertisement.

Useful words and phrases:

Dear Sir /Madam. I am writing in response to your advertisement in... I would like to apply for the post of...

PARAGRAPH 2

Summarise the suitable qualification you have for the job.

Useful words and phrases:

As you can see from my СV ... I am a qualified ... instructor.

In addition, I hold certificates in... I am a fluent / good speaker of...

PARAGRAPH 3

Summarise the relevant experience you have.

Useful words and phrases:

Furthermore I have the relevant experience you are looking for. For the last five years I have ...

Two years ago I was ...

PARAGRAPH 4

Say why you would like the job.

Useful words and phrases:

There are a number of reasons why I would like to ...

firstly, secondly, thirdly, furthermore, what is more, I hope to gam. I enjoy working with ... This will be an opportunity to ...

Say thank you and sign off:

I look forward to hearing from you soon. Yours faithfully, (your full name)

Write 100-150 words

Pronunciation guide

Obey

Productivity

Utility

Leisure

Substitution

Encourage

Canoeing

Furthermore

 

 

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Before you read _

 

Discuss the following with your partner.

 Look at the photos. Each photo shows

something that an economy needs in order to produce. Talk with your partner about what the photos show and why each thing is necessary for an economy

 

A Vocabulary

 

Choose the correct word.

1 All machines need maintenance / replacement so that they keep working well.

2 Scientists' laboratories are usually full of packaging / apparatus for experiments.

3 When a machine gets very old you need to buy a

maintenance / replacement.

4 It's illogical / mental to take an umbrella out on a sunny day.

5 Plastic and cardboard are used a lot for the

packaging / apparatus around products.

6 Some people enjoy doing illogical / mental activities like crosswords and board games.

7 Wood that hasn't been made into anything yet is called timber / crops.

8 A storage / warehouse is a large building for storing things.

9 The things that farmers grow in then fields are called timber / crops.

10 An industry that needs many workers is known as

a factor / labour intensive industry.

11 If you don't need furniture or equipment for some time, you can put it into storage / warehouse.

12 The price of a product is a factor / labour which influences our decision to buy it.

 

 Reading 1

 

Factors of production

 

One morning you wake up with a great idea.

You've thought of a product that no onе else has, and you're certain there's demand for It. Hut how will you turn your Idea into reality? First of all you'll need raw materials to manufacture from - probably oil and metal, but also paper for packaging. You can't produce it by yourself, so you'll need people to help you make it. package it and market it. Finally, your staff will need a factory and machines to produce with. In short, you need the factors of productions: land, labour and capital.

 

 

 

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The factors of production arc the starting point for all economies. No economy can exist without them. The most basic of the factors is land. When economists talk about land, however, they don't just mean space to build on or fields to grow crops. Land means everything that nature provides and we can use for production. The land factor includes raw materials like coal, metals, oil and timber. It also includes things like water, fish and salt. So. although it seems illogical, land also means the sea!

The second factor is labour. Haw materials will just stay in the ground unless people dig them out and do something with them. Similarly, factory machines will sit doing nothing Without people to operate them. Labour can mean the physical effort such as lifting, digging and building. This is called manual work. Labour also includes mental work like thinking, writing, communicating and designing. Industries that need many workers working long hours are called labour intensive industries. However, the quality of labour is as important as the quantity. An educated, skilled and fit workforce is more productive than an uneducated, unskilled and unhealthy one. This characteristic of the labour factor is called human capital. Some countries have large labour forces, but are poor in human capital because the economy lacks education and health care.

The third factor is capital. Capital includes buildings such as factories for production and warehouses for storage. It also includes the tools and equipment that workers use in the manufacturing process. In heavy industries such as shipbuilding or steel making, capital usually involves big machinery and mechanical equipment. In high-tech industries, on the other hand, capital generally means computers and complex laboratory apparatus. These days, industry tends to be more capital intensive than labour intensive.

When companies make investments, they buy new capital. There are two types of investment that companies need to make. The first is to buy new equipment so that they can expand their production. This is called net investment. Net investment is essential for economic growth. However, equipment gets old and needs repairing or replacing. The money spent on this kind of maintenance is called replacement investment.

Land, labour and capital are the three factors of production identified by Adam Smith and the classical economists. However, more recent economists have identified one more factor: entrepreneuship. This means people like you. with great business ideas that set the economy in motion.

 

E Comprehension

 

Now read the text again and decide whether these statements are true or false.

Raw materials are the most important factor of production.

The land factor includes all the raw materials that come from the land and the sea.

The most important thing about the labour factor is the size of the labour force.

In modern economies, more labour

is used than capital.

Net investment allows companies to increase their production.

Entrepreneurs are part of the labour factor.

 

Before you listen

 

Discuss the following with your partner.

Entepreneurship is the fourth factor of

production. Which things in the list below do you think entrepreneurs bring to the economy?

 

С Listening

 

1 managing people

2 motivating people

3 finding solutions to problems г

4 communicating with customers

5 inventing new products

6 finding new markets 2 making profits

8 organising things

9 taking risks

Now listen and tick the things which are mentioned.

 

 

 

 

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Before you read _

 

Discuss the following with your partner.

Look at the workers in the picture:

What kind of work are those people doing?

How do you think they feel about it?

What advantages are there for the company in organising workers like this?

 

D Vocabulary

 

Complete each sentence with a word or phrase from the box.

■ automatically	■ child rearing	■ dye
■ emotional	■ fundamental	■ means
■ mindless	■ sew	■ sloppy
■ specialisation		■ take pride in

 

  

 

1 .......................of transport are the methods we use  to get from one place to another.

2.......................work is work that is not very  good quality

3 To make clothes you have to know how to  .......................the material together.

4 Having a.......................means that you deal with  one particular area of any field.

5 You may visit a doctor if you have problems with your.......................health

6 Competition is.......................to the idea of the  free market.

7 People who.......................their work do it very  carefully and enjoy the results.

8 Mothers and fathers both have important roles to  play in .

...................... .

9 Some people regard factory work as a  .......................job but it isn't necessarily boring.

10 When you do something........................you do it  without thinking.

11 When manufacturers.......................clothes, they  add colour.

 

Reading 2

 

Division of labour

 

Without the factors of production, companies cannot get started. To be successful, however,

they need to make good use of those resources. To make best use of labour, you need to organise it. The divisior оf labour is one way to achieve this.

Let's take making shirts as an example. What do you need to do to make a shirt? You need to design it, fund the right material, cut the material, sew the pieces together, dye the shirt and sew on the buttons. One person working on their own Could probably do all these tasks. This is one way to organise labour. Another way is for a number of" workers to share the job. Each worker is responsible for one task in the process. This is an example of the division of labour

The division of labour isn't a new idea. Even very early societies had some form of labour specialisation. For example, in some societies men were hunters and gatherers of food, while women were responsible for child rearing. However, as

societies became industrialised, the division of labour increased. Factories became the main

 

 

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means of production, and each factory worker became responsible for smaller and smaller stages in the process.

As each worker gets more and more experience at doing their particular task, they get letter and better at it. This should improve the quality of their work. With smaller task to do. workers can do things autumatically, without thinking about them.  This will speed up their productivity, and speed up the whole production process. Finally, small tasks are easier to learn. As the division of labour increases, the amount o| time needed to train each worker decreases All of this means a more efficient and productive workforce ... at least, in theory.