Where money goes? About 70 per cent of the average households spending goes for 11 such as housing, food, clothes and health care. To be able to 12 these items and still have money left for nonessentials such as travel and entertainment, most families find themselves economizing and watching their pennies. The same problem of matching limited resources with 13 endless demands confronts businesses and public agencies.
That is essentially what the economy is all about 14 choices on how to use limited resources of money, manpower, machinery and materials, whether it involves a shopper deciding what to buy in the supermarket or a manufacturer deciding what line of goods to produce.
Choices made in the economy involve a continuous tug of war between consumers and producers over price.
If many businesses are offering a product and there is plenty of it to satisfy the 15 of all consumers, a producer will be forced to sell at a price not far above costs in order to keep from being stuck with a lot of 16 supplies. This is why, for example, the prices of fresh fruits and vegetables 17 drop during the summer months when such produce is in 18
However, a low price especially if it falls below what it costs a seller to make the goods will discourage production, perhaps 19 the high-cost producers out of business or force them to make something else.
Again using an example from agriculture, farmers periodically plant less wheat or raise fewer cattle if the prices for those goods give too 20 return for the costs involved.
A. strive B. little C. abundance D. necessities
E. wealth F. afford G. needs H. normally
I. unmarketable J. making K. unreasonable L. seemingly
M. drive N. selected O. frankly
II. D 12. F 13. L 14. J 15. G 16. I 17. H 18. C 19. M 20. B
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