English For business management

1. Complete these sentences according to the iníormation in the text. The largest element of direct costs is usually_______.. Finish the statement below with the best endina accordinu [r]

ThS Phạm Thị Nguyên Thư ThS Nguyễn Thị Huệ

Engllsh FOR B U SIN ESS

M A N A G EM EN T

NHÀ XUẤT BẢN BƯU ĐIỆN

L Ờ J T Á C Q J Ả

Uu k in h tế,xã hội ngày càng p h á t tiếng A n h đ ã đ a n g

rỏ th à n h ngôn n g ữ giao tiếp của nhiều quốc g ia trẽn p h ạ m vi

°à n cầu.Sau k h i Việt N a m g ia n h ậ p Tô chức Thư ơng th ế

ùới (W TO), các doa n h nghiệp trong nước ngày càng p h ả i trực

lếp cạnh tra n h g a y g ắ t với các d o a n h nghiệp nước ngoài trên

'hỉ trường trong và ngoài nước M ột trong các yếu của

loanh nghiệp nước ta là trìn h độ tiếng A n h của cán q u ả n

’à k in h d o a n h còn k h á h ạ n chế.

Đ ế g iú p các d o a n h nghiệp Việt N a m tự và từ ng bước

iến vữ n g chắc trong tiến trìn h hội n h ậ p và cạnh tra n h , và các

'lên thức A n h n g ữ chuyên n g à n h m ộ t cách có hệ thống, ch ú n g

bi đ ã n g h iên cứu,biên soạn và p h ố i hợp N h à x u ấ t bản B ư u

f-lện x u ấ t bản cuôh sách “E n g lỉs h fo r B u sin e ss M a n a g e m e n t”.

N ộ i d u n g cuôh sách g ồ m 10 bài học A n h )

'án p h ẩ m , Giá cả,Lạm p h á t, Tài chính, K ế toán và

'ược sắp xếp và k h a i thác theo tr ìn h khoa học H ơn cuôh

ôu và s ự p h á t triển từ vựng theo m ức độ tă n g d ầ n đ ế người học

h á t triển k h ả n ă n g tư duy,diễn đ ạ t trong

Cuốn sách sẽ góp p h ầ n n h a n h chóng n â n g cao độ

q u ầ n lý - k in h d o a n h và các sin h viên chuyên n g à n h Q TK D CL

trư ờ ng Đ ạ i học, Cao đ ẳ n g và bạn đọc q u a n tâ m đến vực nà

L ầ n đ ầ u tiên biên so ạ n cuốn sách n à y k h ô n g trán

k h ỏ i n h ữ n g th iế u sót, c h ú n g tôi x in trâ n trọ n g cảm ơn n h ữ n g

k iế n đ ó n g góp q u í báu của các bạ n đ ô n g n g h iệp tro n g q u á

biên soạn, và r ấ t m o n g n h ậ n được n h ữ n g ý đ ó n g góp châ

th à n h của độc g iả và học viên g ầ n xa /.

Đ ồ n g tá c g iả

ThS P h ạ m Thị N g u y ê n Thư ThS N g u y ển Thị H uệ

Ụnii I : T h e meaning o f economic 5

UNIT I

THE MEANING 0 F ECONOMIC DEVELOPMENT

TEXT 1.1 ECONOM1C GROWTH

There is general agreement amongst economists concerned with the pi"0blems of less developed countries (LDCs) that a distinction should be niade between economic growth and economic development

Economic grovvth is deíined as an increase in the productive Capacity of an economy over time, givine rise to an increase in real National Income (NI) II'the rate of the growth of income is ữreater than lhe rate of grovvth ofpopulation, income per capita will also rise

Economists distinguish between the Gross Domestic Product (GDP) and the Gross National Product (GNP) of an economy GDP is the total nnal output of goods and Services produced within an economy for any given year, by both residents and non-residents, GNP is equal to GDP plus net factor (or property) incomes from abroad (that is the ditTerence betvveen returns to the inhabitants of the country from propcrty located 0verseas mínus the returns accruing to íoreigners from their property located within the reporting country) For most LDGs, net propertv

•ttcome from abroad is likely to be neeative and thus GDP will be greater than GNP

Both domestic product and national product can be expressed in net tenns (that is, after a!lowing for Capital depreciation) and either at market prices or íactor costs (that is, including and excluding respectively, indirect taxes net of subsidies) Net National Product (NNP) at tầctor

“Ost is.identical to National Income

For many LDCs economic growth has been rapid and sustained tor nuch of the post Second War period Table 1.1 shows that in particular,

be middle-income LDCs (60 countries with a per capita income of more han $370 per annum) have niade signiEcant progress, although the low-

6 Engỉish fòr Business

income countries (36 vvith per capita incomes of less thai $370 per annum) have been less successtul World Bank prọịections tbr the 1980s predict that hisher rates o f economic growth vvill be diiTicult 10 reach and sustain and that there will occur a vvidening in both the relative and absolute gaps bet\veen the richest and the poorest countries, including the eap between the middle-and-low-income LDCs

Tahle 1.1: Economic growth

Exercise ĩ: Ansvverthe following questions.

1 What is the basic ditĩerence betvveen real income and money income?

2 Under what circumstances will income per ri se?

3 What is the difference betvveen GNP and CỈDP?

4 What is GDP likelỵ to be greater than GNP in most LDCs?

5 What evidence in Table 1.1 shows that there vvas niore economic growth in the period 1960 - 1980 than in the period 1950 - 1960?

6 Compare the grovvlh o f middle-income counlries vvith both industrial and lovv-income countries in the period 1960 - 1980 What conclusion do you reach?

Ọnit I:The meaning tìf economic d 7

Exercise 2: Decide whether the íbllovving statements are true or íầlse.

1 Economic grovvth vvill cause an increase in real National Income

2 National Income is the same as Net National Product ai làctor cost

3 It is predicted for the 1980s that there will be no economic erowth

4 It is tbrecasted íor the 1980s that lovv-income LDCs will not arow

as quickly as middle-income LDCs

Langu age use

Structure 1: Relative pronouns

Notice how the two folIọwing sentences can be ịoined toaether:

Agriculture employs a large number of workers

The workers are otten poorly paid

= Agriculture employs a large number of workers who are often

poorly paid

By ịoining the sentences in this way, the noun workers is not

•'epeated The relative pronoun who is used, íblIowed by the words

which describe xvo rkers(which forms a relative clause) The purpose of

the relative clause is otten to give extra or more detailed intbrmation or

to be more precise In the text, a nurnber of relative clauses aro used: \vho

refers to persons; w h ichrefers to things; also refers to things (andSometimes persons)

Exercise 1

Join the following pairs of sentences together make the second

Sentence in each pair a relative clause of the tìrst sentence Write out the

new sentence, putting the relative clause in the correct place (next to the

Correct noun), and choosing the correct pronoun (xvho 01'

8 English fòr Business

1 In many LDCs agriculture is verv inelĩicienl Agriculture is thí

lareest sector

2 Economic grcnvth is not a suffícient condition on its own to ensure

an increase in economic welfầre

3 Dudley Seers has iníluenced the thinking of many economists He

has delìned development as almost a synonym for improvement

4 Development can be determined by various criteria The criteria

relate to poverty inequality, unemployment and sell-reliance

5 Hicks and Streeten conclude that there is no viable alternative to

using CiNP at present Hicks and Streeten have analysed four

dilYerent approaches to the problem of measuring development

Exercise 2: Combine these pairs of sentences as in the example.

Example:The Services are useful The workers provide Services.

The Services w hhe \vorkers provide are useful t

1 The goods are essential They need the goods

2 The schools and hospitals are essential They provide schools and

hospitals

3 The goods are valuable He buys the goods

4 The money buys essential commodities People can earn this

money

5 The goods and Services are very usetiil People produce these

goods and Services

Ọnit 1: The mecming o f economic devel 9

6 The work is called economic activity We do this work

7 The vvork provides them with money People do this vvork

8 The economic activities make up the economic System People undertake these economic activities

Exercise 3: Rewrite the following sentences using the relative pronouns:

1 I saw the man He closed the door

2 The girl is happy She won the race

3 The student is from China He sits next to me

4 The students are from China They sit in the front rovv

5 We are studying sentences They contain adịective clauses

6 I am using a sentence It contains an adịective clause

7 Aleebra problems contain letters They stand for unknovvn numbers

8 The taxi driver vvas íViendly He took me to the airport

^tructure 2: Defínitions

1 Look at the two detìnitions given below:

- Economic growth is deỉìned as an increase in the productive

•^pacitv o f an economy over time

10 English fo r Business

- GDP [s the total tìnal output of aoods and Services produced Yvithin

an economy for any gi ven year

2 Another way to give a deíĩnition Notice the laneuage

construction:

i s c o n c e m e d w iththe measurement causes and consequences of social

problems

Exercise 4

Now write dellnitions for the following subịects using the

information given Note a and b are vvritten in the tlrst stvle and d are

wrilten in the second slyle

a National in m e- measure oi'the monetary value ol'the total llo\v

o f soods and Services produced in an econom v over the speciiìed

period o f time.

b Elasticity -measure o f the degree oi' responsiveness of one

variable to chanses in another

c Statistics -mathematics - use of collected numbers vvhich

represent iầcts or measurements

d Econometrics - economics - the application ot' mathematical and

statistical techniques to economic problem?

TEXT 1.2 ECONOMIC DEVELOPMENT

ín the early year ot' the evolution of development economics as a

distinct area of study, economic growth and economic development were

senerally seen as being synonymous The deílciencies ot using GNP

capita as an indicator ot'economic welíầre (and by implication the level

o f econoinic development) were recognised by economists hovvevẹr and

over time it became inereasingly evident that economic grovvth on its

own, although undoubledly a necessary condition, Yvas certainly not a

sufficient condition to ensure increases in economic ĩet alone soeial

vvelíầre

Un ị/ I: Themecming o f economic 11

Implicit within the concept of economic development vvas some

notions ot' progress Economic development was thus taken to mean

growth plus structural and institutional change which involved the move

towards certain normative goals or objectives Clearly sroxvth without

development was a possibility if increases in per capita incomes were not

accompanied either by structural changes or by the diíĩusion of the gains

in real incorne among all sectors of the population

However, unless it is explicitly assumed that all sectors in the

economy arow at an equal rate so as to leave the proportions of the

national economy that they present unchanged the concept of economic

growth as consisting of continuous increases in total or per capita

incomes \vithin unchanged structures cannot be deíended Economic

grovvth wi11 almost inevitably lead to changes in the economic structure

of the economy and thus to deíìne development as "growth plus change"

is not particularly helplìii

With respect to the normative detìnition of development it is in the

work of Dulley Seers that we detìne the most intluential and \videly

reproduced deíìnition For Seers,

“ Development” is inevitablya concept.

synonym for im provem ent.T o pretend ío hide one

yaỉue judgement.

Posing the question, “Where are these values to come from?” Seers

replies:

(Seers 1972 p.22)

The criteria that Seers suggests should be used to judgc whether or

not development taking place relate to property inequalitv and

Unemployment Other indicators relate to the political social and

educational dimensions of development and in the PostScript to the re-

published article (Seers, 1979, pp 27-8) a turther dimension is added -

"development implies, inter a lici.reducing cultural dependence on one 01

be about.

Difficulties arise, however, when the attempt is made lo assess thí extent to which such objectives are in practice being realised Hicks anc Streeten (1979 p 568) Ídentiíy and review four different approaches tc the problem o f measurement, namely:

1 Adjustment to GNP in order to capture some o f the welfare aspects of development and improve international comparability:

2 Social indicators which attempt to deíìne non-monetarv nieasures

They conclude:

“Attempt to introduce other costs and beneíìts o f development which would move GNP toward a broader welfare measure, lack a logical basis and tend instead to result in a coníusion o f concepts Research on “social” indicators has failed to produce an alternative vvhich is as readily accepted and comprehended as GNP per head System o f social accounts which could integrate social indicators through some uniíying concept have not been able to overcome succes'sfully all the diffícult problems encountered

The search for the composite index of social welfare, analogous to GNP as an index o f production, has been a íruitless one so far, since it has proved virtually impossible to translate every aspect of social progress into money values or some other readily accepted common denominator The great deal o f work devoted to composite indices

Unií ì:The meaninẹ o f economic development 13

hoxvever, suggest the need for a single number which like GNP per head can be quickly grasped and gives a rough indication of “social” development”

(Hicks and Streeten, 1979, p 577)The recognition that economic growth does not automatically solve problems relating to poverty, inequality and unemployment has been an 'mportant step forward in the evolution of development studies But the

^Ormative, essentially utopian, deíìnition of development itselí create problems "Seers-type” detìnition of development reter to an ideal world

°r State o f affairs and, as a consequence, are both ahistorical and aPolitical- ahistorical because they postulate idealised structures that do lot, and never have, existed, and apolitical because development is

^elìned in an abstract sense and is not related to anv particular 3olitical/social/economic structure

The division of the world into developed and less developed

“Ountries, and the utilisation of an idealised concept of development, niply that the developed còuntries have in some sense “solved*’ the 5roblems of development, whereas clearly this is not the case In lddition, the popular, normative concept of development denies the

!pecifícity o f the processes of growth and change that are occurring in 'Ontemporary LDCs

^Xercise 1: Answer the following questions based on the text.

1 In what ways, in theory at least, might there be grovvth without development?

2 ưnder what circumstances might it be possible for economic grovvth consist of continuous increases in total or capita

incomes within unchanged structures?

3 In addition to property, inequality and unemployment what other indicators or element of development teature in the work of Dudley Seers?

Exercise 2: Match the words from the text with their explanation

synonyms (words or phrases with the same meaning)

7 PostScript o #ơ \vithout a political dimension

proved) as a basis tor reasonina

Exercise 3: Reduced Velative clauses

It is sometimes possible tbr a reduced relative clause to be uS' instead o f a lu 11 clause In this case the relative pronoun is omid'

together with part o f the verb Look at these examples of reduced relati’

clauses:

'Ui/ I; The rheanim* ofeconomic de 15

1 "There is general agreement amongst economists concemed vvith

e- economists who are concerned with )

2 "GDP is the total lìnal output of eoods and Services produced

ìthỉn an economy for any given year ” (xvhich has been omitted

f'ter Services -note: xvhich isrefers to totcil fmal

Find and write down the reduced relative clauses in the text 1.2

16 English for Business

UNIX 2

ECONOMICS FOR DEVELOPMENT

TEXT 2.1.THE RELEVANCE OF VVESTERN ECONOMICS?

For a quarter o f a century, economists have argucd over th' relevance and useíulness o f “Western” economics to l'non-Western economies

The debate was largely initiated by Dudley Seers in 1963 with thí publication o f his article entitled ‘T h e Limitations of the Special Case” The “special casev was the private enterprise developed industria economv, characterized by Seers as “an autonomous and tlexible socio- economic structure, in vvhich each human being responds individually tc the material incentives offered and which is subịect to no íbrmidabU exogenous strains” (Seers, 1963, p 83)

Seers conceded that certain elementary proposition retained theit general validity in the context o f LDCs but he \vas particularly critical ol the application o f macro-economic concepts and models He araued that propositions derives from largely static analysis were irrelevant and perhaps misleading and that insufficient attention had been paid to the speciíìc political and institutional structure of the LDCs Most importantly, the study of the LDCs could not be divorced from an examination o f their position within the world economy,- not least because o f the “openness" of their economies, their dependence on the developed industrial economies as markets for their (mainlv) primary product exports and their vulnerability to protective measures imposed

by such economies

Paul Streeten (1967) further retìned and strengthened the critique ot orthodox economic theory He argued that economic models particularly those used in development planning were subịect to a number of related and systematic biases viz:

^nit 2: Economics 17

1 The separation of parameters (social and legal institutions, psychological attitudes) from variables: this might be appropriate and justifíable in Western economies but in LDCs as sirnple distinction should not be made between “economicv and “non- economic” factors;

2 The tendency to select one factor (for example, Capital and education) as the strategic íầctor in development;

3 The tendency to assign the role oi' suíTicient condition to what may or may not be one of several necessary conditions for development;

4 The íầilure to recognise that many concepts íòrmed by aggregation (income, employment savings investment) are oltcn based on implicit value ịudgements and presuppose the existence of conditions that might vvell be absent in LDCs

"Xercise 1: Answer the following questions.

1 According to Dudley Seers what was the *‘special case"?

2 Why was Seers not in tầvour of using static analysis for LDCs?

3 According to Seers what was the signitìcance of the LDCs’ position in the world economy?

4 In Streeten’s view, was it appropriate to choose one factor as being crucial for development?

*ercise 2: Decide whether the following statements are true or false

1 Dudley Seers.really started the arguments that have been going on for 25 years about the relevance o f Western economics to non- Western economies

18 English for Businessmanageme,

2 Although Seers admilted that some íundamental concepts wer generally appropriate for LDCs, he found fault with th application o f macro-economics to LDCs

3 Accordina to Seers the "openness” of LDCs’ economies was no

a reason for looking at their position in the vvorld economy

4 Paul Streeten also criticised conventional economic theorv b) arguine that economic models were likelv to have several hiases

5 In reality there may be a number of necessarv conditions foi development yet there is a tendency to allot the role of the onl>' sufficient condition to merely one of them

Structure 1: Present siniple tense (verb tense)

In usine the present simple active tense students oiten make a

mistake omitting the ímal-.ĩ from the third person singular ending e.g: he

Exercise ĩ

Complete the passage by writing down an appropriate verb trom the list for each numbered space Use each verb only once The íìrst verb has

I

Vnit 2: Economics 19

Structuralists see the vvorld as intlexible, Little (I) They

(2) the price mechanism and (3) to promote change in other

^ays Neo-classicists, on the other hand, (4) the world as beingAexible They (5) that the price mechanism (6) rather well

^eo-classicists (7) their argument by pointina to the success that a

hUmber of LDCs have had recently through the implementation ofpolicies that (8) the export promotion ot'manutầctured uoods They

also (9) that empirical evidence (10) vvhich (11) support to

Iheir view

Structure 2: Negatives

A Negative has been expressed in a number o f ways Look at some examples:

c There is no generally accepted radical explanation

In (a), vvhere verb tenses contain an auxiliary verb (e.g: not is placed after the auxiliary, e.g: They have not been oble or

after the verbs be and have if they are full verbs.

ỉn (b) where a verb tense does not contain an auxiliary: does, dici + n0ị + verb inlìnitive (without to) is used, e.g: He agreed He did llot agree.

In (c) no can be used as an adjective, e.g: He had answer

Note- The phrase by no means = not at all, on no account in no way.

Look at some other examples:

Unless it is explicitly assumes =

To judee xvhether or not it is taking place = if or not

X was seen not as Y but as z = instead of (an altemative is proposed)

not only (but also ) = something additional

20 Englishfor Business

The negative can also be expressed by:

None -used as pronoun e.g: they had none

e.g: N eith ertheory is acceptable.

N eith

Note: Certain verbs include a negative within their meanina e.g:

To lack = to not have, to be without

To deny = to say that somethins is not true

To reỷuse = not to accept or do or eive

Exercise 2

Complete the followine paraeraph by vvritine down an appropriate negative form for each numbered space

Streeten stressed that he rẹịected (1) ali the analytical (2)

all the planning modeỉs Hoxvever, he emphasised that models should be(3) rigorous (4) realistic If a model had (5) relevance, then

it was (6) useful He considered that many cuirent models (7)

have "the vital organs"’

Exercise 3

Using the iníbrmation in A and B above make the folIowing sentence negative in four diííerent ways ensuring that bolh parts of the sentence have a negative meaning

1 If a model had relevance, then it was usetul

2 If a model had relevance, then it was usetul

3 If a modei had relevance, then it was useful

4 ỉf a model had relevance, then it was useíul

Exercise 4: Complete the foIlowing sentences in an appropriate vvay.

1 LDCs are often not only but also

2 In many cases, LDCs have neither nor

3 When discussing the causes o f inAation there is otten no

4 Unless a theorv

1 E x t 2.2 ECONOMICS OR DEVELOPMENT ECONOMICS?

Streeten emphasised that he was not rẹịecting all analytical or

hlannine models

'lecessary conditions o f analysis and policy But models be

etevcint and úseỷul.The trouble with manv current models that thev

" e shapelyand elegant, bat lack the vital organ ”.

(Seers, 1967, p 57) Although Seers, Streeten and other like-minded economists mounted

1 Powerful and sustained onslaught on orthodox economics both neo-

:'assical and Keynesian, the established orthodoxy was b\ no means

*efeated The detenders of the neo-classical paradigm such as Myint

^ 6 7 ) and Bauer (1971) continued to argue that the orthodox static

lleory of the allocation of scarce resources was as relevant to the less

Cveloped as to the developed economies, and that the market remained

le most effícient and effective mechanism for the proper allocation of

lose scarce resources

ỉn niore recent work in the neo-classical tradition Little (1982 Ch 2)

as elaborated on the distinction that is made betvveen "structuralist” and

e°'Classical economics Structuralist, he argued, see the world as

'^exible, with change inhibited by a variety of obstacles bottlenecks,

§'dities and constraints They thus distrust the price mechanism and

iek to promote change on other ways The neo-classical view o f the

0rld, on the other hand, is one of Aexibility The price mechanism is

:pected to work rather well and neo-classical economics can be

;scribed as:

2: E c o n o m i c s f o r d e v e l o p m e n t

To support their arguments, neo-classical economists point to th

success thai a number o f LDCs have had in recent years in breaking int

export markets for manutầctured goods through the implemenlation c

policies conducive to export promotion They also argued that empiricí

evidence is increasingly becoming available that supports the neo

classical contention that, if íầctor prices are “right'’ (that is, iíthey rellec

their social opportunity cost), tìrms will substitute cheaper labour to

more expensive Capital and thus create greater employment opportunitie

through the use o f niore labour-intensive techniques of production

Perhaps the main achievement o f the neo-classical school hovvever

has been the development of the techniques of social cost-benetì

analysis (SCB) This is a technique o f prọịect evaluation designed tc

ensure that projects are selected according to their social proíìtability

Because market prices are likely to be "distorted” shadoxv prices arí

estimated vvith which social costs and beneíìts are calculated and sociaỉ

welíầre is maximised by maximising the net present value of the stream

o f benefits net o f costs, using an appropriate discount rate

SCB has been vvidely used by international agencies and national

planning ministries It has not, however escaped crilicism, and

economists such as Stewart (1975) and Lall (1976) have attacked both

the methodology o f SCB and the basic principles which underlie it Lall

in particular has criticised what he conceived to be the ideological base

o f welfare economics (the assumption of a harmony of interests betweefl

all members o f sociely), its individualistic premises (its ignoring tho

tbrmation o f preíerences) and its State povver premises (thai the State is

neutral, that it acts in the “national interest”, etc )

SCB is an application of neo-classical micro-economic analysis As

was noted in text 2.1 hovvever Seers (1963) also criticised the

2: Economics 23

aPplication of orthodox Keynesian macro-economics to LDCs Macro-

economics is concerned with the economv as a vvhole in terms of

aêêregate variables and íocuses on the determinants of aggregate supply

ar>d demand for national output Perhaps in this area more than in any

°dier, there was general agreement in the literature that Keynesian short-

' Ur> demand management analysis vvas not relevant to the prohlems íầced

by LDCs The main area of controversy in the macro-cconomic tìeld vvas

lbe conílict betxveen "structuralists” and “monetarists” over the causes

and cures for, inílation

More recently, a structuralists macro-economic theory has begun to

emerge Taylor (1983 p 3) argues that:

1ts Members make some patterns o f resoarce alhcation and evoìution

The attempt to incorporate the specific structural íeatures of LDCs

‘Ito ìnacro-economic theory represents an important advance in the

:°ntinued evolution of "development economics” Many \vould still

ìrẽue however, that “economic is not enough", and thai what is needed

s a move towards explicitly multi-disciplinary “development studies".'

The emereence o f “development studies" vvill not lead to the

-hsappearance of the individual disciplines vvithin the social Sciences, but

^ill rather create the opportunities for the breaking down ot' the barriers

iet\veen those disciplines and the encouragement of greater

'°nimunication betvveen the various development specialists in

ìc°nomics, politics, sociology, anthropology economic history, and so

>n- It is to be hoped that a more complete understanding of the problems

poveity and inequality, at both the national and international level,

vill emerge from this broader nuilti-disciplinary approach and that

)oMcy prescriptions can be made more relevant and realistic

"xercise 1: Answer the following questions based on the text

1 What was StreeteiTs main criticism of some planning models?

24 English for Business

2 What is Little's view o f the role o f the price mechanism?

3 What evidence is there to support the neo-classical view of th

1 rigorous a a test or criterion for determining the

quality or genuineness o f something

2 quantitìcation b dispute argument debate

I

Vnii 2: Economics developmenl 25

17 substantially q- limitations restrictions

26 English fo r Business managemc

whisky and a newspaper satisíy very different wants and the whisky i not a close substitute for the car This special characteristic of satisfyiní

a want is known in economics as its “utility” Utility is not the same aí useíulness A submarine, for example, may or may not be useful ir peacetime, but it satisíìes a want Many nations want submarines Economists describe this kind o f utility as the relationship betvveen 3 consumer and a commodity

Utility varies between different people and betvveen diíTerent nations A vegetarian does not want meat, but may rate bahanas very highly A mountain-republic like Switzerland has little interest in submarines, while maritime nations rate them highly Utility also varies with time In time of vvar, the utility oí'bombs is high and that o f pianoS

is low ưtility is thereíore related to our sense o f priorities The utility ot

a commodity is also related to the quantity available to the consumer lí men buy a large quantity of paper, they will lose interest in buying more paper The demand for paper will go down The utility o f a commodity consequently decreases as the consumer’stock increases

In most economic Systems, the prices of the mạịority o f goods and Services are íĩxed The individuals cannot change the prices of the commodities he wants and when' planning his expenditure, he must accept these prices A consumer will go on buying cigarettes as long as his satisíaction continues and they render utility If he continues to pay the current price, his satisfaction is greater than his íinancial sacriiìce

k

Ọnit 3: Some economic 27

^ ith each purchase, however his satisfaction decreases although the Prices remain the same If a consumer’s supply of money is limited, a 3°int will come when the Anancial sacrifice is greater than the 5atisfaction of smoking cigarettes He will stop buyine the commodity

^he cigarettes are the same, but their utility has changed ỉt'the prices

°se, he would buy fewer; if they fell, he might buy more

We can see that the nature of a commodity remains the sanie, but its ttility chanees This indicates that a special relationship exists betvveen

=°ods and Services on the one hand and a consumer and his money on

he other hand The consumer’s desire for a commodity tends to diminish

ls he buvs more units of that commodity Thus tendency is called the ja\v of Diminishing Marginal Utility

Utility is of course related to the Laws of Supply and Demand

^hen economists talk about the Law of Supply, they mean that a rise in 'rices tends to increase the supply of a commodity while a tầll in prices ìr>ds to reduce it When they talk about the Law of Deniand they mean 3at a fall in prices tends to increase the demand for a commodity, while 1'ise in prices tends to decrease the demand In any economic situation consumer will decide to buy a commodity only in terms of its particular hlity to him

If the prices of a particular commodity rise in the economy as a 'hole, the rise will naturally encourage producers to make more of that 3mmodity If, on the other hand, prices fall locally or throughout the 'Orld, producers will reduce production Supplies of many commodities

tn generally be adịusted to suit market conditions This means that langes in market prices lead to changes in the quantity of a particular 3rnniodity made available to consumers Household goods and íìimiture 'e in this category In such instances supply is said to be elastic,

“Cause it can be increased or decreased rapidly to suit market prices.The principle of elasticity operates in the area of demand as well as the area of supply People very seldom have everything they want hey usually have to choose caretully how they will spend their money

28 Engììsh for Business

When they exercise this choice they work accordina to their personí scale o f preíerences, beginning with top-priority essentials likc íoods ant housing Next on their scale come those commodities vvhich provid comíort or convenience of some kind (telephones Insurance, etc) an< íìnally come the non-essentials like holidays and trips to the theatre which are important parts o f life but not comparable vvith food aní shelter If it is necessary to pay verv hieh prices for the essentials of lite people pay them - even if this means spending all their income In sucl' cases demand is inelastic For non-essenlials however đemand is elastic and particularlv responsive to changes in price

3 Because a consum ers desire for a commodity tends to diminish

as he buys more units o f that commodity economists talk o f a Law of Diminishing Marginal Utility

4 Because the supply o f íbrniture and household goods can be adjusted to suit market conditions we say that their supply is elastic

5 Because elasticity of demand reíers to things high on our scale of preferences, we can say that the demand for essentials like foods and shelter is very elastic

t ’nit 3 :Some ec 29

Exercise 2: Insert a suitable preposition in each oí' the blanks in these

sentences

1 He is interested _ economics

2 He is not concerned non-essential commodities

3 The dem and _ bananas will probably increase

4 The supply _ cigarettes does not usually lluctuate

5 The consum ers needs _ such commodities is well-known

6 There vvas a change _ the quantity of material supplied

7 He paid quite a lot of m oney _ that car

8 He paid the m o n ey that man

9 The American economic System is b a se d capitalistic principles.

10 Most citizens coníorm the law of the country inwhich they live

11 Non-essential commodities like chocolates can not be compared

basic necessities like shelter

^tructure 1: Word forniation - Suffixes

When you are reading, you will come across uníamiliar words It is Tten possible to guess the meanings of these words if you understand the vay words in English are generally formed

Affixes

Pretlxes + stem + suffíxes

An English word can be divided into three parts: a preíìx a stem and suffíx Pretlx means “beíore”, a pretìx thereíore is what comes beíore

30 English for Business

the stem Consider as an example the pre means "again" in a wor<

like “reconstruct-construct again” A suffix is what is attached to the ení

o f the stem Consider as an example the suffíx (meanina "someont

who”) in the word "policy maker" (the person who makes policy)

Prelixes usually change the meaning of the vvord for example

changes the word to neeative 'iUnqualifìeđ' means "not qualitìed enouglr’

SuíTixes on the other hand chanee the word IVoni one part of speech

aives the adverb completely.Let novv consider some suffíxes and their

usual meaninas

Suffixes

Exercise 1: Make nevv words irom the given words

Example: Capital —» capitalism —> capitalist -> capitalistic

Note: The suffíxes -ism = System

-ist = person-istic = about the System or person commune

1 social

2 national

3 real

4 individual

Vnit 3 :Some ec 31

Exercise 2

Below are pairs of sentences In the first sentence, there is a verb in

italics In the second sentence, there is a blank Make the italicized verb

mto a noun in order to fill the blank

Example: manage manage - ment ->management

1 It is sometimes necessary to cidjust the quantity of goods flowine

on to the market This is made according to

market conditions

2 He arranged the committee meeting H is were veiy elYìcient.

sometimes takes the form of ílnancial help

4 Some economists are interested in changes in the price

of essential commodities T h is extends over a period

of years

5 The management tried-tò assess the amount of money needed for

the plan T h e was to be made by a special committee

might be very proĩitable

Exercise 3

Study the table It shows how vvords can be formed by adding the

suffìxes -ịỷỳand -cation (with suitable changes in spelling).

Example:simple_sim plity _ simpliíìcation

ưse the table and the example to help you fíll in the blank in the

Sentences:

Simple

PureClass

NOTE: remember to remove the “e” in simple, note and pure.

32 English for Business

1 This plan is not simple enough We must th erelo re _ i

T h e of plan is essential

2 The economy o f that country belones in the Marxist ẹroup c

class We must therelbre it as communistic T h e _

o f the economy o f that country is not difficult

_ it T h e o f the water is a matter o f public health

4 Please send a note to the members of the Council You shouli

■ them o f the date of the next Council mceting Th'

_ should reach them this week

5 The economics teacher tried to make the situạtion He triec

t o _ his description by making it simpler When he madt

th is , his students understood the whole matter much better

Exercise 4

Seven words can be formed írom the basic vvord This table

shows you how to do it Make a list of the words and put each word in its

suitable place in the sentences You will also need the word nution itseir.

1 The USA is the homeland o f the American

2 Most countries h av e banks such as the Bank of England

3 The Socialist Party has plans to _ various privately

owned Industries.

4 British Rai! is already a _ industry, because it is publicly owned

5 The name given to the change from private to public ownership

is

Ọnit 3 :Some economic laws 33

6 In the last twenty years has been a strong political forceleading to the iníbrmation of many new nations

7 A person who is interested in the progress and history of his owncountry may be called a

8 Many governments have certain policies vvhich are notinternational but sim ply

^ructure 2: Using the auxiliary verbs or for emphasis.

-Xercise 5

Change these sentences using the auxiliary verbs do or did These

’erbs are used for emphasis

Example:

i These goods and Services have a value

^T hese goods and Services do have a value

ii These people went to the City to find work

OThese people did go to the City to find work

1 These factors have an effect upon the economic System

2 The management tried to change the methods

3 The representatives of the employers and employees met last week

4 The decision made by the trade unions affects everyone in the industry

5 Short-term economic anarchy has a bad eíĩect on long-term stability and investment

6 The surplus money provided Capital for a new housing scheme

34 English for Business

7 Stable condition led to an improvement in the eeneral State of th economy

8 The govemment encourages new commercial enterprises

9 A change in government usually means a change in policy

10 The minister vvanted to make a fundamental change in thi national economic policy

TEXT 3.2

Bananas are a typical example of perishable goods By ••perishable’

we mean vvhich goods cannot be stored for any length of time without going bad Most foodstuffs are in the perishable category Such goods are oíTered for sale as quickly as possible, and so the supply oí' perishables and the stock o f perishables available at any time are usually the same in quantity

This is not true in the case o f non-perishable goods like coal, Steel and cars, which cannot deteriorate easily The supply of ears on the market may not be the same as the actual stock o f cars in the factories Economists talk about the Law of Supply, in which the rise in prices tends to increase supply, while a fall in prices tends to reduce it If prices rise for a particular commodity, the rise will of course encourage producers to make more On the other hand, if prices fa!l either locally or throughout the world, producers will reduce production This can result

in serious difficulties for many producers, and may cause them to go out

o f business completely Over-production of any commodity can also create diffículties, because it can lead to a glut on the market which may cause prices to fall sharply

Supplies o f many commodities can generally be adịusted to suit market conditions This means that changes in prices lead to changes in the quantity o f a particular commodity which is made available to

Unit 3 :Some economic 35

consumers Household goods and fumiture belong to this category In such instances supply is said to be “elastic”, because it can be increased

or decreased rapidly in response to market prices

Exercise 1: Answer these questions, basing your answers on the text.

1 What are perishable goods?

2 What two things are usually the same in quantity?

3 What happens when the Law of Supply operates?

4 What does a rise in prices encourage?

5 What does a fall in prices cause?

6 What serious effect may a fall in prices have on some producers?

7 What can over-production lead to?

8 What happen when the supply of a commodity is adịusted to suitmarket conditions?

9 What kinds of goods belong to the category of commodities thatcan be adịusted easily?

10 What is meant by “elastic” supply?

Exercise 2

Say whether these statements are true (T) or false (F), and if they are false, say why

1 Bananas are a typical of goods that easily deteriorate

2 Steel can be stored for a long time without losing its value

36 English for Business

3 The actual stock of cars in a factory is usually the same as tl supply of cars available on the market

4 According to the Lavv o f Supply, a rise in prices tends 1 reduce supply

5 If prices tầll locally, production vvill be reduced throuahoi the world

6 When there is a glut on the market, demand decreases an' prices fa.ll

7 Changes in prices lead to a chanee in the quality oí'a commodity

8 Supply is “elastic” because market prices rise and tầll

Exercise 3

Combine these pairs o f sentences using that and changing vvill tc

wouId.

Example: He told me something The prices vvill change

“^ H e told me that the prices would change

1 They told him something The committee vvill meet next week

2 The economists expected something The prices w i 11 íluctuate considerạbly

3 The government anticipated something The workers \vill demand

higher wages

4 The management decided something The new tầctory will be

located in a diflerent City.

5 The development committee arranged something The meetings will be held at regular intervals over the next tvvo years

Ị/nii 3:Some ecỉaws 37

TEXT 3.3

Elasticity of supply, as a response to changes in price, is related to deniand Economists deiìne ‘•demand” as a consumer’s desire or want, together with his willingness to pay for what he vvants We can say that deniand is indicated by our vvillingness to offer money for particular ỗoods or Services Money has no value in itselí, but serves as a means of eXchange between commodities which do have a value to us

People very seldoni have everythine they want Usually vve have to

^ecide careíully how to spend our income When we exercise our choice

do so according to our personal scale of preterences In this case of pfeferences, essential commodities come first (ibods, clothing, shelter,

^edical expenses etc ), then the kind of luxuries which help us to be Pìore comíortable (telephone special turniture Insurance etc ) and

*'hally those non-essentials vvhích give us personal pleasure (holidays, Parties, visits to theatres or concerts, chocolates etc ) They may all Seem important but their true importance can be measured by deciding Vvhich we are prepared to live without Our decisions indicate our scale preíerences and thereíore our priorities

Elasticity of demand is a measure of the change in the quantity of a ỗoods, in response to demand The chanee in demand results from a change in price Demand is inelastic when a goods is regarded as basic

^cessity, but particularly elastic for non-essential commodities

^Ccordingly we buy basic necessities even if the prices rise steepỊy, but buy other things only when they are relatively cheap

^Xercise I: Ansvver these questions, basingyour answers on the text

1 What is elasticity of supply a response to?

2 Whal is the detlnition o f “demand”?

3 How is demand indicated?

38 Engỉish for Businesmanagem

4 What is money?

5 What do we do when we exercise choice?

6 What comes second in our scale o f preferences?

7 What is our third priority?

8 What is elasticity of demand?

9 When is demand inelasticity?

2 Money is usually valuable in itself

3 People do not usually have everything they want

4 Basic needs come beíòre luxuries

5 Our decisions on how to use our money show what we need moS1 and what we are willing to do vvithout

6 Demand for essential commodities is alvvays elastic

[nit 3 :Some eclaws 39

'Xercise 3: Give suitable opposites for these words

Example:capitalism -> communism

MinorityPositiveSolidMaximumPublicSimplifyTheoreticalCollectiveLong-term

40 English for Business

U N IT 4

MARKETS AND MONOPOLIES

TEXT 4.1 MARKETS AND MONOPOLIES

1 Although in a perfect market, competition is unrestricted and sellers are numerous, free competition and large numbers of sellers are not always available in the real world In some inarkets, there may only be one seller or a very limited number o f sellers Such a situation

is called a “monopoly”, and may arise from a variety of different causes It is possible to distinguish in practice four kinds of monopoly

2 State planning and Central control o f the economy olten mean that a State government has monopoly o f important eoods and Services Some countries have State monopolies in basic commodities like Steel and transport while other countries have monopolies on such comparatively unimportant commodities as matches Most national authorities monopolize the postal Services vvithin their borders

3 A different kind of monopoly arises when a country, through geographical and geological circumstances, has control over mạịor natural resources or important Services, as for example with Canadian nickel and the Egyptian ovvnership of the Suez Canal Such monopolies can be called natural monopolies

4 They are very diííerent from legal monopolies, where the law of the countiy permits certain producers, authors and inventors a full monopoly over the sale of their own Products

5 These three types o f monopoly are distinct from the sole trading opportunities which takes place because certain companies have obtained complete control over particular commodities This action is often called "concerning the market” and is illegal in many countries