• WISH LIST
• Let us check the products/services that is previously and
currently in your wish list.
• Categorize the products/services into different levels. Below
is how you can categorize the product/service:
• Level 1: I already have it. (for those products/services that
you already have but is in your wish list before)
• Level 2: Ready to buy it. (for those products/services in your
wish list that you are planning to buy within this year.)
• Level 3: I want it, but I can’t afford it now. (for those
products/services in your wish list that you are planning to
buy but not within this year)
• Level 4: I want it, but how? (for those products/services in
your wish list
• that you don’t know where to buy it or of it is available in the
market)
Demand and Supply
• If our needs and wants can be backed by our
buying power, it becomes demand. It means
that we have the ability and the willingness to
buy the product at a given price within a given
time period. On other hand, the supply refers
to the quantity of goods and services that
firms are ready and willing
to sell at a given
price within a period (Viray and Avila-Bato
2018).
THE LAW OF DEMAND
• The law of demand states that: all other
things remain constant (Ceteris Paribus),
the higher the price of a good the lesser
the demand for that good and the lesser
the price the higher the demand.
THE LAW OF DEMAND
• The relationship between the price and demand
is inversely related. It is because of the
substitution
effect
and
income
effect.
Substitution effect means that if the price of
Product A increases the consumer will look for
its substitute and will cause decrease in quantity
demanded for Product A. On the other hand,
having the same income, an increase in price of
a product will cause a decrease in quantity
demanded because the consumer may not afford
THE LAW OF SUPPLY
• The law of supply states that the quantity of
products offered to be sold is directly related
with the price. It means that when the price
increases the quantitysupplied increases too
and if the price decreases the quantity
supplied decreases too.
Analyzing Demand
• The demand can be analyzed using:
• A. Demand Schedule –a table that shows the price
of a good and the quantity demanded for that good
at a given price within a given period.
• B. Demand Curve – a graphical representation that
shows the relationship between the price of a good
and the quantity demanded for that good at a given
price. It usually uses the information in the demand
schedule.
• Changes in Quantity Demanded compared to Changes in
Demand
• Changes in quantity demanded happened when there is a
change in the demand for a product because of the
change in price. For example, the quantity demanded for
chicken at ₱120.00 was 10 kilos per month but when the
price of the chicken increased by ₱10.00 the quantity
demanded decreased to 8 kilos. Another increase in price
of the chicken happened making it ₱140.00 per kilo
because of that the quantity demanded decreased again
to 7 kilos.
• The change in demand is not always positive
sometimes it falls. The change in demand may
be affected by several factors such as:
• Taste and preferences
• Income
• Seasonal products
• Population change
• Prices of related good
(substitute/complementary goods)
• Expected future prices, income and credit
Analyzing Supply
• The supply can be analyzed using:
A. Supply Schedule - table that shows the
prices of a good and the quantity supplied at
each price at a given point of time
B. Supply Curve - a graphical representation
that shows the relationship between the price
of a good and the quantity supplied at a given
point of time.
Change in Quantity Supplied compared to
Changes in Supply
• Changes in quantity supplied happened when
there is change in the quantity of goods
produced to be sold because of the change in
price. It happens because businessman or
entrepreneurs prepared to sell their goods at a
higher price to yield more profit.
For instance, an online seller of chicken dishes
has following supply schedule that shows how
many packs of chicken dishes he prepares at a
different price.
• Figure 1 shows the graphical representation
of the supply schedule in Table 3. It is
positively slope showing that the price and
quantity supplied are inversely related. Table
3 and Figure 3 shows the change in quantity
supplied because of the change in price.
• Changes in supply is a shift of supply curve
because of some factors other than price.
For example, the quantity supplied in Table 3
changes not because of the change in price
but because of the increase in the number of
online sellers offering the same product. The
table below shows the new supply schedule.
• Factors that can Cause Changes in Supply
• Technology
• Cost of production
• Number of sellers
• Government policies (Taxes and
subsidies)
• State of nature (weather)
• Prices of related goods produced
• Future expectations (possible increase in
Market Equilibrium
QUANTITY DEMANDED = QUANTITY SUPPLIED
• As stated in the law and supply and demand,
market equilibrium happens when there is an equal
demand and supply causing the price to remain the
same.
• When the supply is greater than the demand it
causes the price to decrease but when the demand
is greater than the supply the price increases.
• Equilibrium market price – price agreed by the
buyer and seller
• Figure 5 shows the equilibrium between the
quantity demanded and quantity supplied. It
is the point of intersection between the
supply and the demand curves. It shows that
the Equilibrium price (Pe) is 25 and the
equilibrium quantity (Qe) is 140. It means that
if the price and quantity change there will be
market disequilibrium (shortage/surplus).
• When the quantity supplied is greater than quantity
demanded there will be surplus. On the other hand,
shortage is when the quantity demanded is greater
than quantity supplied.
• Change in demand or supply may result to the
changes in market equilibrium.
• To protect the seller or the buyer when there is
market disequilibrium the government sets the
minimum price (floor price) or maximum price
(ceiling price) for some goods, this is what we
called price control.
Elasticity of Demand and Supply
• Price Elasticity of Demand
• Price elasticity of demand measures the
change in demand in response to the
change in price. For example, the price of
pork increases by 5 % the price elasticity
will be determined by identifying the
percentage of decrease or increase in
demand due to the change in price.