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private ownership
Market economy
2. Match the following words/ phrases/ concepts with their equivalents listed below:
1. Bankruptcy
2. Competition
3. Consumer
4. Demand
5. Entrepreneur
6. Investment
7. Laying off
8. Market share
9. Monopoly
10. Owner
11. Profitability
12. Property
13. Setting
14. Subsidy
15. Supply
16. Unemployment
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
o.
p.
1
10
11
12
13
14
15
16
3. Fill in the gaps with the suitable form of the words in the box. There are more words
than you need.
bankruptcy; competition; consumer; demand; entrepreneur; investment; laying off; market
share; monopoly; owner; profitability; property; setting; subsidy; supply; unemployment.
Market economy is characterized by private ___________(1) over the economic
resources. The private ___________(2) may obtain, control, employ and dispose of property
and resources as they see fit. This type of property rights encourages ___________(3),
innovation, exchange and economic growth.
Freedom of enterprise and of choice are closely linked to private property in a market
economy. That means there are no artificial obstacles imposed by government to an
___________(4)s choice to enter or leave a particular industry or market; it also signifies that
workers are free to work wherever they choose according to their skills, and most important
of all, ___________(5) are free to buy, within the limits of their incomes and money
resources, the goods and services that are most appropriate for meeting their needs. The
consumer ultimately decides what should be produced in an economy.
___________(6) is a fundamental feature of market economy. This implies the
existence of a large number of buyers and sellers operating in a market for a particular product
or resource. Each of the competitors tries to obtain as big a ___________ ___________(7) as
possible to the detriment of the other competitors. The fact is of fundamental importance for
the quality of goods and services supplied, for if consumers are dissatisfied with the
assortment or quality supplied by a company, they switch over to a competitor. This means
loss of market share hence a loss of ___________(8), and if the management is unable to find
a solution it might lead to huge losses so that unprofitable companies face ___________(9).
Company management when faced with lower demand from consumers often has to increase
productivity by laying off idle workers, a fact which gives rise to ___________(10).
There is no government interference for the ___________(11) of prices, which are the
outcome of the interaction of ___________(12) and demand.
In a command economy state property is dominant. The state actively interferes in the
setting of prices and instead of competition there is ___________(13). Unprofitable
enterprises get state ___________(14), so there is practically no bankruptcy. Therefore
unemployment is not usual in a command economy, as there is no real reason for increasing
productivity and profitability, as long as wages and salaries can be paid, not necessarily from
the revenue obtained by the company, but from the state subsidies. On the other hand,
consumers are not privileged in a command economy. They have no choice so the quality of
goods and services is often quite below standard.