1) The document discusses the economic concepts of demand, supply, and the factors that influence them. It defines the laws of demand and supply, which state that quantity demanded is negatively related to price, and quantity supplied is positively related to price. 2) Demand and supply curves can be depicted graphically, through schedules/tables, or as equations. The market demand is the sum of individual demands. Factors like income, prices of related goods, tastes and preferences affect demand. Supply is influenced by costs of production, prices of inputs, technology, and government policies. 3) Movement along the curves occurs when price changes, causing adjustments in quantity demanded and supplied. Shifts of the curves happen when

1. Prepared by: Dionne Mona Dandoy & Jeffrey Catipay

2. - a fundamental building block in any
economic analysis.
- One of the elements that make market
economics work.

3. Law of Demand states that, holding
all other things constant, the
quantity demanded for a commodity
or service is negatively or inversely
related to its own price.

4. Law of Demand

5. 3 essential reasons why the price-
quantity relationship depicted in a
demand curve:
1. Opportunity cost
2. Purchasing power or budget of the
consumer
3. Higher Price

6. The demand-price can be depicted in 3
different ways:
1. Graph
2. Schedule/Table
3. Equation/Demand Function

7. Demand Schedule- is a numerical
tabulation of the quantity demanded of a
good or services at selected prices,
assuming other things are held constant.
Price per Unit Quantity Demanded per
Week
25 0
20 1
15 2
10 3
5 4
0 5
Demand Schedule for Notebooks

8. Demand function/equation: Qd = a – bP
Qd – stands for quantity demanded
P – price
a – the horizontal intercept of the equation
or correspondingly, the quantity
demanded when price is set at zero.
-b – the slope of the function.

9. All other things remaining unchanged, when
price changes, whether in the upward or
downward directions, what happens is a
movement along the demand curve. The
change in price results in changes in
quantity demanded.

10. The market demand or the total demand for
a good or services is the sum of the
demand of all individual buyers.
Price of good is the most important factor
that affects demand because when we
defined the demand-price relationship,
other factors were held constant.

11.  Income and Income Distribution
A higher income generally translates into
greater ability to buy and hence, raises the
demand for goods and services.
 Normal Goods – are products whose demand
increases as income increases or whose
demand decreases as income decreases.
 Inferior Goods – are products whose demand
decreases when a consumer’s income
increases.

12.  Prices of related goods in consumption
Prices of related goods in consumption
affects our demand for communities.
 Substitute Good – goods that can be used in
place of another good.
 Complementary Good – a good that is
consumed along with another good.

13.  Consumer tasks and preferences
When consumer tastes and preferences
shift towards a certain good, greater
amounts of it are demanded.
Geographic Condition – another factor
which influences tastes
 Consumer Expectations
The demand for specific commodities
may also be affected by expectations about
the future.

14.  Unexpected Events
Acts of nature and other unexpected
events alter the demand for a good or
services.
 Number of buyers
As increase in the number of consumers
affects the market demand for a good and
shifts the market demand to curve to the
right.

15. Supply – describes the behavior of firms that
are producing and selling goods and services.
Law of Supply states that the higher the price,
the higher the amount or quantity of a good
that will be supplied by firms or producers.
The lower the price, the lower the quantity
of a good that will be bought to the market.

16. Law of Supply
As
prices
fall
Quantity
supplied
falls
As
prices
rise
Quantity
supplied
rise

17. The supply-price relationship can also be
depicted in two other ways:
 Supply Schedule – a numerical tabulation of the
quantity supplied of a good or service at selected
prices, assuming other things are held constant.
Supply-price relationship function/equation:
Qs= c + dP
Q – quantity supplied
P – price
C – horizontal intercept of the equation
d – the slope function
 Table or Supply function/equation

18. A movement along the supply curve occurs when
the price of the good changes, causing the
quantity supplied by forms to change.
Market supply curved is derived by considering
the behavior of all firms in the market.

19. Other variables that affect supply:
 Technology
 Changes in the prices of resource inputs
 Prices related goods in production
 Number of firms
 Expectation of future prices
 Government taxes, subsidies and
regulations

20. Technology
Anything that changes the amount of outputs
that a firm can produce with a given amount
of inputs can be considered in technology.
Changes in the prices of resource inputs
When the prices of resource inputs, such
as raw material, fuel products and labor
increase, it becomes costlier to produce
goods.

21. Prices related goods in production
Factor inputs like land, labor and capital
equipment can be used to produce not just
one but several goods and services.
Number of firms
The larger the number of settlers, the greater
the market supply, other things remaining the
same.

22. Expectations of future prices
Producers may withhold some of their current
output in anticipation of higher prices in the
next period.
Government taxes, subsidies and
regulations
An increase in sales taxes and other
forms of taxes is an added cost to production
and will decrease supply.

23. Subsidies, in contrast, lower producer’s cost
and will lead to an increase supply.
Government regulations, which can increase
or lower the costs of production, also
affect the supply of output of firms.