Question

Open the brackets.
Who (to tell) workers where (to work) or what occupation to choose? Who (to declare) haw many cars should (to produce) and how many homes should (to built)? Who (to specify) the predominant style of women’s dresses or men’s suits? The greater the degree of competition the more these matters (to decide) impersonally and automatically by the price system or the market system. This may ( to view) as a system of rewards and penalties. Rewards (to include) profits for firms and people who (to succeed). Penalties (to include) losses, or probably bankruptcy, for those who (to fail). The price system (to be) fundamental to the traditional concept of market economy. The price system basically (to operate) on the principle that everything that (to exchange) – every good, every service, and every resource – (to have) its price. In a free market with many buyers and sellers, the prices of these things (to reflect) the quantities that sellers (to make) available and the quantities that buyers (to wish) (to purchase). Thus, if buyers (to want) (to purchase) more of a certain good than suppliers (to have) available, its price (to rise). This (to encourage) suppliers (to produce) and (to sell) more of it. On the other hand, if buyers (to want) (to purchase) less of a certain good than suppliers (to prepare) (to sell), its price (to fall). This (to encourage) buyers (to purchase) more of it. This interaction between sellers and buyers in a competitive market, and the resulting changes in prices, (to be) what most people (to refer) to by the familiar phrase “supply and demand”.

Answer 1

Who told workers where to work or what occupation to choose? Who declared how many cars should be produced and how many homes should be built? Who specified the predominant style of women’s dresses or men’s suits? The greater the degree of competition the more these matters were decided impersonally and automatically by the price system or the market system. This may be viewed as a system of rewards and penalties. Rewards included profits for firms and people who succeeded. Penalties included losses, or probably bankruptcy, for those who failed. The price system was fundamental to the traditional concept of market economy. The price system basically operated on the principle that everything that was exchanged – every good, every service, and every resource – had its price. In a free market with many buyers and sellers, the prices of these things reflected the quantities that sellers made available and the quantities that buyers wished to purchase. Thus, if buyers wanted to purchase more of a certain good than suppliers had available, its price rose. This encouraged suppliers to produce and sell more of it. On the other hand, if buyers wanted to purchase less of a certain good than suppliers were prepared to sell, its price fell. This encouraged buyers to purchase more of it. This interaction between sellers and buyers in a competitive market, and the resulting changes in prices, was what most people referred to by the familiar phrase “supply and demand”.