DEMAND

 Refers to the entire relationship between the quantity

demanded of a product and the price of that product.
 2 Important elements:
 The willingness or the desire to buy
 The ability to buy or the purchasing power of the
consumers.
“absence of one of the elements would mean no demand.”
 Demand is the quantity of a good or service that
consumers are willing and able to purchase during a
specified period under a given set of economic
conditions. The time frame may be an hour, a day, a
month or a year.
DEMAND SCHEDULE
- A table showing the different units of the product that
can be sold at different prices
 DEMAND CURVE
 It is the graphical presentation of the demand schedule.

LAW OF DEMAND:
“when the price of the product is high, the
demand for that product will go down and vice-versa at
ceteris paribus”
DEMAND FUNCTION
Qd = 300 – 5P
POINT OR PRICE (Php) QUANTITY
SITUATION

A 60 0
B 50 50
C 45 75
D 40 100
E 33 135
F 28 160
G 25 175
H 20 200
 DEMAND SCHEDULE for Stuffed Toys
 Demand Function: Qd = 100 – 2P
POINT OR PRICE (Php) QUANTITY
SITUATION
A 50 0
B 45 10
C 40 20
D 35 30
E 30 40
F 25 50
G 20
H 15 70
I 10 80
J 5 90
SUPPLY
 Refers to the quantity of goods and services which the
supplier is willing and able to trade at alternative
prices.
“the willingness and the capacity of the supplier is the
basis of declaring the supply in the market.”
“price is the important factor that determines the
quantity of goods that suppliers are willing to sell.”
 SUPPLY FUNCTION
 A mathematical equation which illustrates the
relationship of the price and supply.
Qs – dependent variable (quantity supplied)
P – independent variable (price)
Qs = -400 + 80P
Where:
-400 = represents the quantity which the supplier does
not want to sell at a the low price of P5.00.
any change in Qs is related to the value of 80P.
• SUPPLY SCHEDULE
- A table showing the different units of the product that
can be sold at different prices
 SUPPLY SCHEDULE OF PENCIL
POINT PRICE Qs
A 5 0
B 8 240
C 10 400
D 12 560
E 15 800

THE TABLE ABOVE SHOWS THAT THE SUPPLY _______________ AS

THE PRICE CONTINOUSLY INCREASE.

To get for P in the equation, if it is missing in the table:

240 /80P = 3P
3P + given price in point A (P5.00) = P8.00
 SUPPLY CURVE
 It is the graphical presentation of the supply schedule.

LAW OF SUPPLY:
“when the price of the product is high, the
producers are willing to sell more and vice-versa at
ceteris paribus
FACTORS THAT AFFECT THE SUPPLY
1. COSTS
 Production costs
 Tax
 Salaries of workers
 Price of raw materials
 Operating expenses
“if production cost is high, supply of the product in the market is low.”
2. SUBSIDY
- assistance provided by the government to small-scale
producers.
“subsidy will increase the supply of product in the
market.”
3. WEATHER/CLIMATE
-weather condition affects the production of goods
especially agricultural products.
4. TECHNOLOGY
-the use of modern machineries speed up
production processes and increase output.
5. NUMBER OF SELLERS
- the number of sellers is a determinant of the
abundant supply of a product in the market.
6. PRICE OF RELATED PRODUCTS.
7. EXPECTATION AND SPECULATION
EQUILIBRIUM
 Equilibrium – is a market condition where quantity
supplied equals quantity demanded.
 Equilibrium price – the price level that both buyers and
sellers agree to have a transaction in the market.
Qd = Qs
 Equilibrium quantity – quantity of products that buyers
and sellers agreed to transact at a specified price.
Qd = Qs
substitute the price in the demand and supply
function
 Qd = 63 – 3P
Qs = -25 + 5P

POINT PRICE Qd Qs
A 5
B 39
C 10 25
D
E 13 40
F 18
1. COMPUTE FOR THE EQUILIBRIUM PRICE
2. COMPUTE FOR THE EQUILIBRIUM QUANTITY
3. COMPLETE THE DEMAND AND SUPPLY SCHEDULE
4. PLOT IN A GRAPH
PRICE ACT
 R.A. 7581 – law mandating the government to
implement price control on basic commodities.
 NATIONAL PRICE COORDINATING COUNCIL –
formed by the Price Act to guard and monitor the
prices after the announcement of a price ceiling.
PRICE CEILING
 Refers to the highest or maximum price declared by
the government for a particular product. It is the
selling price of the product approved by the
government.
 PRICE CONTROL – implemented if a state of calamity
is declared.
 The price declared is lower than the equilibrium price
in the market.
FLOOR PRICE
 Refers to the lowest price or minimum price declared
by the government for a particular product.
 PRICE SUPPORT – implemented to help producers
recover their production cost and to gain some profit.
 Price support is higher than the equilibrium price in
the market.