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5. BJECTIVES
Explain the law of demand and
supply
Discuss and explain factors
affecting demand and supply

6. APPLIED ECONOMICS:
THE LAW OF SUPPLY AND
DEMAND
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7. 7
a. The class will be divided into two (2) groups by counting 1
to 2; those who are number 1 will be the buyers and those
students who are number 2 will be the sellers.
b. The teacher will hold up a product i.e.., chocolate bar and
ask the buyers to raise their hands if they would buy the
chocolate bar if it cost only 5 pesos. Then, the price will be
raised to 10, 15, 20 pesos.
c. The teacher will then count the buyers who raised their
hands and will record it in the table shown in the slide.
d. After completing the record of the number of buyers per
cost. The teacher will ask the sellers if they want to sell
their products for high or low price.
MECHANICS

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e. The teacher will again record the number of sellers who
would want to sell the chocolate bar for the given prices.
f. The teacher will now show the recorded number of buyers
and sellers

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9
Product Chocolate Bar
Price/Cost ₱ 5.00 ₱ 10.00 ₱15.00 ₱ 20.00
No. of Buyers 10 4 2 1
Product Chocolate Bar
Price/Cost ₱ 5.00 ₱ 10.00 ₱15.00 ₱ 20.00
No. of Sellers 0 2 3 12
TABLE 2
TABLE 1

10. TABLE 1 10
Product Chocolate Bar
Price/Cost ₱ 5.00 ₱ 10.00 ₱15.00
₱
20.00
No. of Buyers 10 4 2 1
What can you observe?
The lower the price of chocolate bar,
the higher the number of buyers
bought it.

11. TABLE 2 11
Product Chocolate Bar
Price/Cost ₱ 5.00 ₱ 10.00 ₱15.00
₱
20.00
No. of Sellers 0 2 3 12
What can you observe?
The sellers are willing to sell more
when the price is higher.

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In your own idea, what could be the other possible reasons or
factors why more buyers are willing to buy the chocolate bar at a
lower price? Like in our community why some people tend to
buy things at a lower price?
 It depends on a buyer’s income. Like if I am a
low-earner I can afford the chocolate bar at only
5 pesos.
 depends on a buyer’s preference.

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What is DEMAND?
 demand is the willingness and
ability of buyers to purchase
quantities of goods at different
prices.

14. TABLE 1 14
Product Chocolate Bar
Price/Cost ₱ 5.00 ₱ 10.00 ₱15.00
₱
20.00
No. of Buyers 10 4 2 1
DEMAND

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Do you think people in our place will buy
more kilos of native rice at 45 pesos per
kilo than at 100 pesos per kilo? Who
said yes? Who said no?

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What is Law of Demand?
Law of Demand states that as the price of a
good rises, the quantity demanded of the good
falls, and as the price of the good falls, the
quantity demanded of the good rises, ceteris
paribus
The law of demand says that rising prices
reduce demand. So as prices rise, customers
buy less. That's particularly true if they can
substitute cheaper goods

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What is SUPPLY?
 Supply is willingness and ability of sellers
to produce and offer to sell different
quantities of a good at different prices
during a specific time period.
 an increase in demand results in an
increase in price.

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What is Law of Supply?
Law of Supply states that as the price of a
good rises, the quantity supplied of the good
rises and as the price of a good falls, the
quantity supplied of the good falls, ceteris
paribus.

19. The Origins of the Law of
Supply and Demand

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The Origins of the Law of Supply
and Demand
John Locke
 Locke addressed the concept of supply and
demand as part of a discussion about interest
rates in 17th-century England but did not actually
use the term "supply and demand." Its first
appearance in print came in 1767, from Sir James
Steuart.
Sir James Steuart
 Steuart's Inquiry into the Principles of Political
Economy, published in 1796, was the first known
printed use of the term "supply and demand."

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The Origins of the Law of Supply
and Demand
Adam Smith
 Father of Economics
 Smith explained the concept of supply and
demand as an "invisible hand" that naturally guides
the economy.
Alfred Marshall
 In 1890, Alfred Marshall's Principles of Economics
developed a supply-and-demand curve that is still
used to demonstrate the point at which the market
is in equilibrium.

22. The Origins of the Law of Supply
and Demand
Ibn Taymiyya
 Islamic scholar Ibn Taymiyyah, who died 300
years before Locke's aforementioned publication,
has recorded writings about the law of supply and
demand, though he didn't use those exact terms.
He discussed how prices are determined by
demand and supply and not by the unjust actions
of people involved in the transaction.
Source: https://www.investopedia.com

23. FACTORS AFFECTING DEMAND AND
SUPPLY

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ACTIVITY
LET’S DO IT ! (10 mins.)
Each group will present three examples of
supply and demand that will portray how
law of demand and supply happened in
our everyday live.

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QUIZ
LET’S DO IT !
In a 1 whole sheet of paper answer the following
question.
1. What is the law of demand?
2. What is the law of supply?
3. How does the price of related goods affect
demand? Cite an example or situation.
4. How does tax affects supply? Cite an
example or situation.

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ASSIGNMENT
LET’S DO IT !
“Choose a partner and conduct a survey of the
current economic situations in our town. Compare
the prices of commodities and analyze the impact
to the consumers as well as the sellers. Write your
findings in a whole sheet of paper.”

28. REFERENCES
https://simplicable.com/economics/supply
https://www.economicshelp.org/microessays/equilibrium/demand
https://www.netsuite.com/portal/resource/articles/