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1. APPLIED ECONOMICS
Quarter 3 week 3

2. LEARNING COMPETENCY
determine the concepts of
market demand, market supply
and market equilibrium
(ABM_AE12-Ie-h3)

3. Market Demand,
Market Supply,
and
Market

4. You will represent real-life situations using the market
demand, market
supply and market equilibrium. Specifically, this module will
help you to:
1. determine the concepts of market demand, supply and
equilibrium
2. state the laws of demand and supply
3. construct and analyze demand, supply and their curves
4. solve problems on demand, supply and equilibrium

5. Economics helps us solve the problem on
excess supply and excess demand, and
lead it to a balanced supply and demand.
In our needs, we do not want oversupply.
It means wastage of income. For
entrepreneurs, it is not efficient if their
stocks or supplies are greater than the
actual demand. It is a loss not revenue

6. In economics, there are terms
that you must learn to
understand the better market
situations.

7. the amount of good or service
consumers are willing to
purchase at each price. If
customers cannot pay for it,
there is no effective demand.

8. is what a buyer pays
for a unit of the
specific good or
service.

9. The total number of units
purchased at that price

10. LAW OF SUPPLY
AND DEMAND

11. The law of supply and demand
explains the interaction between the
sellers of a product and the buyers. It
shows the relationship between the
availability of a particular product and
the desire (or demand) for that product
has on its price.

13. If all other factors remain equal,
the higher the price of a good, the
fewer people will demand that
good.

14. “the higher the price,
the lower the quantity
demanded”
and vice versa.

18. The demand curve is always
downward sloping due to the
law of diminishing marginal
utility.

19. For example, if the price of video
game drops, the demand for
games may increase as more
people want the games.

20. a) income of buyers
b) number of potential buyers
c) preferences
d) complementary products

26. The law of supply demonstrates the
quantities that will be sold at a given
price.

30. Producers supply
more at a higher
price because
selling at higher
quantity at a
higher price
increases revenue.

33. a) Production capacity,
b) production costs such as
labor and materials
c) the number of competitors
d) Ancillary factors such as
e) material availability,
f) weather, and
g) reliability of supply chains

37. The law of supply says ……………….
―as the price of a product increases,
companies will produce more of the
Product.When graphing the supply vs.
the price, , the slope rises.

38. How Do Supply
and Demand
Create an
Equilibrium Price?

39. Equilibrium price or market-
clearing price. is the price
at which the producer can sell all
the units he wants to
produce and the buyer can buy all
the units he wants.

40. Supply and demand are balanced, or in
equilibrium.
the demand curve is downward sloping. This is
due to the law of diminishing marginal utility.
The supply curve is a vertical line; overtime, supply
curve slopes upward; the
more suppliers expect to be able to charge, the more
they will be willing to produce
and bring to market.

41. In the Equilibrium
point, the two slopes
will intersect. The
market price is
sufficient to induce
suppliers to bring to
market that same
quantity of goods that
consumers will be
willing to pay for at that
price.

53. •A demand curve shows the
relationship between quantity
demanded and price in a given
market on a graph.
•The law of demand states that a
higher price typically leads to a
lower quantity demanded.

54. - A supply curve shows the relationship
between quantity supplied and price
on a graph.
- The law of supply says that a higher
price typically leads to a higher
quantity supplied.

55. •The equilibrium price and
equilibrium quantity occur where
the supply and demand curves
cross.

56. The equilibrium occurs where
the quantity demanded is equal
to the quantity supplied.

57. If the price is below the equilibrium
level, then the quantity demanded
will exceed the quantity supplied.

58. Excess demand or a shortage will exist.
If the price is above the equilibrium
level, then the quantity supplied will
exceed the quantity demanded.