Samarkand iktisodiyot va servis instituti

Yε_d = %∆Q_d / %∆Y
For example, if a 2 per cent rise in income caused an 8 per cent rise in a product’s demand, then its income elasticity of demand will be: 8% / 2% = 4
The major determinant of income elasticity of demand is the degree of ‘necessity’ of the good. In a developed country, the demand for luxury goods increases rapidly as people’s incomes rise, whereas the demand for basic goods, such as bread, rises only a little. Thus items such as cars and holidays abroad have a high income elasticity, whereas items such as potatoes and bus journeys have a low income elasticity of demand.
The demand for some goods actually decreases as incomes rise. These are inferior goods such as cheap margarine. As people earn more, they switch to butter or better-quality margarine. Unlike normal goods, which have a positive income elasticity of demand, inferior goods have a negative income elasticity of demand.

Key words:

Descriptive описательный, образный tasvirlovchi, bayon qiluvchi.
Executive исполнительный ijro etuvchi.
Route маршрут yo`nalish.
Insurance страхование sug`urta.
Real настоящий haqiqiy.
Estate поместье, имущество yer-mulk, mol-mulk.
Subsidiary вспомогательный, дополнительный yordamchi, ko`makchi.
Annual ежегодный, годовой yillik
Image образ qiyofa.
Local местный mahalliy.

After studying this module, you should be able to answer the following questions:

1. How responsive is consumer demand to changes in prices and changes in incomes?
2. How responsive is firms’ output to a change in price?
3. How does this responsiveness (or ‘elasticity’) of demand and supply affect the working of markets?

EXERCISES:

I. Open brackets:

1. She must (to be) mad if she thinks he is going to lend her any more money. 2. They must (to be) upset when they heard the news. 3. You must (to come) and (to visit) us soon. It would be so nice to see you again. 4. It's the third time he's been play¬ing the piano today. He must really (to enjoy) it. 5. Oh, look how white and clean everything is! It must (to snow) at night. 6. Oh, you are all in snow, you look like a snowman. It must (to snow) heavily. 7. Look, what huge snowdrifts there are everywhere, and the path is covered with knee-deep snow. It must (to snow) for several hours already. 8. You look fresh! You must (to have) a good sleep at night. 9. You look very tired. You must (to have) a good sleep at night. 10. He knows mathematics much bet¬ter than he did last year. He must (to work) a lot in summer. 11. Your mathematics is very poor. You must (to work) at it in summer. 12. Where is Pe¬ter? — Oh, he must (to read) in the library. He is getting ready for a very difficult exam. 13. You must (to study) English for several years already. Your language is very good.taken in the north. 3. This tape recording was done last week. 4. James was given an excellent mark in history. 5. Ann was given an excellent mark for her geometry test. 6. This house was built at the beginning of this century. 7. This tower was built in the 9th century. 8. This book was written by a very good writer. 9. This film was made by a very good director. 10. This play was written by a very clever playwright. 11. This film has been shot in a fortnight. 12. This book was translated into Russian in the 19th century. 13. This castle was built in the 15th century. 14. This picture was painted by an Italian artist. 15. This computer was built ten years ago.