Рубежный контроль 1.
SUPPLY AND DEMAND IN THE GLOBAL ECONOMY
WHILE YOU READ
As you read the article, stop at the end of each sentence that contains boldface text. Follow the instructions in the box in the margin.
Look back at paragraphs 1 and 2. Find other words meaning growth. Then write these words in the margin.Look ahead and find the meaning of the law of demand. Highlight it.
Write the definition of supply in the margin.
Underline the words and numbers in this paragraph that show how the price of corn changed. / 1 There is a saying that a butterfly flapping its wings in Japan can cause a hurricane in North America. This saying illustrates what could happen in a global economy. An event in a business in one country can significantly affect businesses in other countries. This happened in July 2007 when an earthquake closed several Japanese power plants. These plants produced energy. Because the Japanese could not use their own energy, they needed to buy more oil from other countries. As a result, oil prices around the world rose. This shows that a natural disaster in one country can change the prices of a global product, such as oil, and can cause energy prices to increase around the world.
2 When someone wants or needs a product, it is calleddemand. In the example above, the Japanese demand for oil increased. When people want more of a product, there is a growth in demand.
3 Coffee is an example of a global product that is in growing demand. Every morning, over 166 million Americans wake up and drink their first cup for the day. As they drive to work, they stop at a coffee shop and buy their second cup. By the end of the day, the average American has drunk three cups of coffee. Therefore, the average demand for coffee at current prices in the United States is three cups per day per person. It is important to note that a person will buy three cups a day at current prices. If the price of a cup of coffee increases, the person may decide to drink only two cups a day. The law ofdemand states that as prices rise, demand falls. An average person will buy 70 cups of coffee each month if the coffee costs $3 a cup. However, if the cost increases to $4, the same person will now only buy 40 cups a month. (See Figure 3.1.)
4 Businesses want demand to increase so they can sell more products. However, they must also have enough of their product to sell. This is calledsupply. Supply and demand are closely connected. In the late 1990s, for example, the global demand for coffee grew rapidly. Coffee companies needed more coffee beans, so many farmers in countries such as Brazil and Vietnam grew more coffee - they increased the supply. The farmers received a good price for their coffee beans. However, by 2002, farmers had produced a surplus of this product. In other words, they were producing too much coffee - the coffee supply was 8 percent higher than the demand. As a result, coffee prices fell. Coffee farmers could not sell their beans at the previously high price, so they stopped growing coffee and grew a different crop.
5 A change in supply can have a global effect. Much of the world's corn is grown in the United States. In the past, corn was used mainly for human and animal consumption. However, since 2005, corn has also been used to produce ethanol - an alternative fuel for automobiles. From 2005 to 2007, the U.S. supply of corn for food decreased by approximately 33 percent. This was because corn suppliers, the farmers, sold an increasing amount of this crop to ethanol producers. As a result of this drop in supply, corn skyrocketed to its highest price in ten years. This price increase had a significant effect in Mexico, a country that imports corn from the United States. In a country where 50 percent of its population survives on less than $4 a day, Mexican families depend on tortillas, a basic and inexpensive food. Corn is the main ingredient of the tortilla. Therefore, when the price of corn doubled in March 2007, the cost of tortillas more than doubled. A change in the supply of corn in the United States led thousands of Mexicans to gather in the streets. They were protesting this increase in the cost of the tortilla.
6 The laws of supply and demand are at the center of every business - from a huge global company to a small store that sells freshly cooked kebabs on a street corner in Turkey. Businesses also need to understand that in these days of global trade, a change in supply or demand in one part of the world can have major effects on the rest of the world.
FIGURE 3.1 Demand for Coffee in Cups per Month
MAIN IDEA CHECK
Here are the main ideas of each paragraph in the article. Match each paragraph to its main idea. Write the number of the paragraph on the blank line.
__ A Businesses need to understand supply and demand.
__ B Demand refers to the want or need for a product.
__ C Supply and demand are related to each other.
__ D An event in one country can affect business in other countries.
__ E A change in supply in one country can affect prices in other countries.
____F The changing price of a cup of coffee illustrates the law of demand.
A CLOSER LOOK
Look back at the article to answer the following questions.
Why did the writer include a saying about a butterfly and a hurricane in paragraph 1?
a It explains the law of demand.
b It shows that butterflies can cause hurricanes.
c It helps the reader understand the main idea of the paragraph.
d It helps the reader understand Japanese business.
2According to paragraph 3, what will the average consumer do if the cost of a cup of coffee sharply increases?
aBuy more coffee
bStop drinking coffee completely
cBuy fewer cups of coffee
dBuy the same number of cups, but complain
3When supply is higher than demand, prices rise. True or False?
4 Reread paragraph 4. Then complete the diagram about the supply and demand of coffee. Put sentences A-E in the correct order of events. Write the correct letter in each box.
→ / → / → / →A The price of coffee fell.
B The demand for coffee increased.
C Farmers grew less coffee.
D Farmers grew more coffee.
E There was a surplus of coffee.
5 According to paragraph 5, why did the price of corn rise from 2005 to 2007?
a People were eating more tortillas, so demand grew.
b The supply of corn increased.
c The demand for corn decreased.
d The supply of corn for people to eat decreased.
6 Reread paragraph 5. Name a reason why corn is being used to produce ethanol.
VOCABULARY STUDY: SYNONYMS
Find words in the article that are similar in meaning to the following.
1 large industrial buildings or factories (n) Par. 1
2 to make something (v) Par. 1
3 a plant that is grown for food (n) Par. 4
4a result; an impact (n) Par. 5
5about; a little more or a little less than (adv) Par. 5
6to increase sharply (v) Par. 5
7 to bring something into another country (v) Par. 5
8 to continue to live (v) Par. 5
9 a part of something - usually food (n) Par. 5
10 to show that you strongly disagree with something (v) Par. 5
VOCABULARY STUDY. WORDS IN CONTEXT
Complete the following sentences with words from the list below. If necessary, review the words in the Key Vocabulary.
energy previously event surplus sayingsaffects consumption fuel note flapping
1 The Communist Revolution was an important_in Russian history.
2 There is a______of apples, so the price has dropped because farmers cannot sell them all.
3 Using the sun and the wind is a natural way to produce.
4 When the cost of oil increases, it___the prices of many other products.
5 The flags outside the building were gently_in the wind.
6 Every language has famous____. One in English is "Curiosity killed the cat."
7 It is important to______that some countries do not have a minimum wage.
8Mexico is now producing electronic parts that weremade in Sweden.
9______of beef in China is increasing because the Chinese can afford to buy more of this product than in the past.
10 In Brazil, 40 percent of all automobiles use ______made from ethanol; the remaining 60 percent use gas.
Research
Interview some of your classmates. Ask each one to think of a food, drink, or product that they buy several or more times each month. Ask them how often they buy this food, drink, or product. How much would they buy if the price increased by 20 percent? by 50 percent? by 100 percent?
Discussion
Discuss the results of your interviews with classmates that you did not interview.
Did everyone's answers follow the law of demand?
Writing
Write a paragraph using your research to explain the law of demand. Make a graph using your research to illustrate how demand for the product changes as the price changes.