I.

Market capitalism

Reading the text

Lecture 2. The Market Economy Words/ Terms
Comprehension questions
Vocabulary exercise

Dr. Nguyen Hoang Diem My

Faculty of Economics and Development Studies
University of Economics, Hue University, 99 Ho Dac Di, Hue City
Email: nhdmy@hce.edu.vn
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Reading the text

Competitive market capitalism contains two major decision-

I. Market capitalism marking units whose actions are coordinated through market
II. The basic economic problem exchange. The first is the business firm, which buys resources
III. The market mechanism from households and transforms resource inputs into outputs of
IV. Optional reading products and services that it sells to households. The second is
the household, which owns and sell resources to firms and
purchases outputs from them.
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The two kinds of market relations, as well as the two basic units Business firm are assumed to pursue profit maximization and
of economic decision-making, are interdependent. The demand household try to maximize utility or satisfaction. Both try to buy
for resource inputs is derived from the demand for final products at the lowest possible price (for a given quality of goods) and to
becauses firms produce to sell (at a profit) to consumers. sell at the highest possible price.
Resource inputs, in turn, are required to create outputs.
Consumers are able and willing to purchase products because
they have incomes.

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Consumers obtain income through the sale or loan of their

resources to firms, who in turn organize and coordinate factors of The other major assumption is that markets are competitive,
production to produce outputs from these inputs. which means there are many buyers and sellers, products are
substitutable, buyers and sellers have a lot of knowledge of the

Competitive market capitalism is based on some basic market and resources are able to move freely between uses.

assumptions. One assumption is that both firms and

households desire to maximize their economic well-being through
market exchange.

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Words/ terms Words (cont.)

decision-marking (adj): tạo quyết định utility (n): độ thỏa dụng

to coordinate (v): phối hợp, điều phối given (adj): nhất định

business firm (adj or n): hãng kinh doanh substituatable (adj): có thể thay thế

household (n): hộ gia đình

to transfrom (v): chuyển đổi, biến đổi

to purchase (v): mua, sắm

interdependent (adj): phụ thuộc lẫn nhau

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Words (cont.)
Comprehensive questions
to derive from (v): thu được từ
1. What are the two major decision-making units which market capitalism
in turn (adv): lần lượt contains?
loan (n): vay 2. How are the actions of business firms and households coordinated?
assumption (n): giả định 3. From whom does the business firm buy resources and sell outputs?
well-being (n): phúc lợi 4. What does the demand for resource inputs depend on?
to assume (v): giả định 5. What do firms do with the resources they buy from households?

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Comprehensive questions True/false (cont.)

4. Knowledge of the market is not necessary for a competive

6. How can consumers get money to buy products sold by firms? market.
7. What do both households and business firms do through market exchange?
5. Household organize and coordinate factors of production to
8. What does it mean that „markets are competitive”? produce output.

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Vocabulary exercise
True/false
1. He filled out each of the papers, ……………..
2. We must consider the economic ……………… of poor people when we make
this policy.
1. Buseness firms and households are independent of each
3. The boos is the only person with ……………. power in this company, no one
other? else can make decisions.
4. Economists make many ……………. when they write their theories.
2. Firms and households are both buyers and sellers? 5. It is very difficult to ……………. the schedules of all the students and all the
teachers in the university.
3. Demand for the products of a firm depends on the demand for 6. Salt is not ……………. for suger even though they look the same.
the resources? 7. The husband and wife are.. ……………. he can’t live without her and she
can’t live without him.

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Vocabulary exercise (cont.) II. The basic economic problem
8. We cannot ……………. that she wants marry him, we must ask her opinion
first.
9. The company wants to ……………. inexpensive goods in Vietnam to send to Reading the text
America and sell at a high price.
Words/ Terms
10. That company’s high profits are ……………. from the sale of shoses made in
Vietnam and sold in Japan. Comprehension questions
11. Nobody derives much ……………. form air polution; it just causes health Vocabulary exercise
problems.
12. The changes in government policy should ……………. the Vietnamese
economy from a Marxist economy into a market economy.

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Vocabulary exercise (cont.)

Reading the text
13. They can keep the money for a …………… time period, for example, one
year, but then they must pay it back.
14. Many American ……………would like to invest in Vietnam.
15. Many Vietnamese …………… have more than 2 children.
16. She has a …………… for $500 to buy a sewing machine to make clothes,
but she must pay it back soon.
17. If you want to …………… a career in business, you must understand the
economy.

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Words/ terms Comprehension questions

1. What is another term for „factors of production”?

2. What is the amount of output limited by?

3. In which ways could land be used according to the reading?

4. How should the community allocate its resources?

5. Why can’t we have as much of everything as we want?

6. What is the main topic of the reading?

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Reading the text True/false

1. ..... – We can increase the amount of products if we have

• What factors influence prodution?
• What difficulties are there in production?
• What is the main idea of the text?
more factors of production.
2. ..... – It is always better to leave all land unused.
3. ..... – Workers can be employed in only one occupation or
industry at a time.
4. ..... – Most factors of productions can be used for several
different purposes.
5. ..... – We can have as much of everything as we want in a
given period.

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 Vacabulary exercise (cont.)
Vacabulary exercise
11. Many …………… influence the success of a business including the
1. She …………. studying to going out so she always receives high marks on her government’s policies.
exams. 12. The …………… of work they must do is very large.
2. The are many …………. used in market economics which have not been 13. She has an …………… over him because she studied abroad and he didn’t
translated into Vietnamese yet.
14. You can find anything you want or need in that store because it has a wide
3. Companies must …………. resources to their best use in order to make high …………… of goods.
profits.

4. The whole …………. must help to give food to the poor people.

5. The autumn …………. was not big enough to sell other countries.

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Vacabulary exercise (cont.)

III. The market mechanism

6. Americans can be very ……………; they throw everything away.

7. The land is used as …………… for the cows.
Reading the text
8. There is a …………… person who we are looking for
Words/ Terms
9. She has a big motorcycle and wears a lot of gold, she is …………… very rich. Comprehension questions
10. By what …………… of transportation do you come to the university Vocabulary exercise
everyday?

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 Words/ terms

• Reading the text

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Words/ terms
Comprehension questions

1. What is the market?

2.What are wage rates?

3. What will happen if the demand for a given good rises?

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 Words/ terms
Comprehension questions (cont.)

4. What will sellers do if their products become overstocked at

the going market price.

5. How can an equilibrium between buyers and sellers be

restored when a goods becomes overstocked at the going market
price?

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Words/ terms
Comprehension questions (cont.)

6. What is a factor of production? 7. Name of three factors of

production.

8. What will happen if the demand for a given job rises, and that
for another job falls?

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Vocabulary exercise Vocabulary exercise (cont.)

1. The workers ………. over each other to get out of the burning factory. 15. Parents should ........... a lot with their children so the children will be
2. With inflation, prices ………. rise very quickly. happy.

3. She speaks French, English, and German, ………. Vietnamese. 16. After a war it is difficult to ........... an economy to its previous state
because of damage from bombs.
4. At our store Vietnamese bicycles are ………. , nobody will buy them at
today’s price so they just stay in the store. 17. The ........... of making banknotes is very simple, but requires special
inputs that ordinary people are not allowed to buy.
5. Conditions are very ………. for finding work in a growing economy.
18. The lock ........... is broken so I can’t unlock my door.
6. During the war, the government ………. meat and other foods.
7. Each ………. in the seminar had to give a short speech.

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Vocabulary exercise (cont.)

IV. Optional reading

8. The prices in Vietnam are low ………… to prices in America.

9. After they ………… the goods from the ship you can take them to your store.
Reading the text
10. She ………… for 10 shirts and 10 pairs of pants.
Words/ Terms
11. The new ………… of furniture in this room makes the room look bigger.
Comprehension questions
12. When they heard that there was a new issue of Doraemon comics coming out
people ………… to the store to buy it for their children, or perhaps for themselves.
Vocabulary exercise

13. The recent ………… in the exchange rate made imported goods cheaper.
14. The ………… of wine, women, and song is often used to talk about the things
that please men.

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• Reading the text • What needs reforming?

• What difficulties are there when carrying out reform?

• What benefits can reforms bring to the economy?

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What are necessary to transform a centrally planned economy

into a market economy?

What should be considered first in applying the reforms?

What should a country do next to reform its economy?

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