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Applied Economics11 - q1 - m2 - Applied Economics - v3
Applied Economics11 - q1 - m2 - Applied Economics - v3
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Applied Economics
Quarter 1 – Module 2:
Application of Supply and Demand
General Instructions……………………………………………………… 1
What I Know ……………………………………………………………………… 2
Lessons
Lesson 1: Law of supply and demand, and how equilibrium price
and quantity are determined ………………….……………. 5
iii
WHAT I NEED TO KNOW
1
WHAT I KNOW
Before proceeding to the self-test activity section in this module, kindly answer
the pre-test below.
Name:___________________________________________ Score:_______
Date: _______
Multiple Choice: Encircle the letter that corresponds to the correct answer.
2. It means that all other related variables except those that are being
studied at the moment and are held constant.
A. Ceteris Paribus C. Market Equilibrium
B. Income Effect D. Substitution Effect
4. There are Filipinos affected behaviours in buying an item when they see it
in the commercial on television. What is this term?
A. Advertisement C. Preferences
B. Demand D. Value of Money
2
8. Which type of market structures which is more competitive and many
sellers/producers competing each other with the same products?
A. Monopoly C. Oligopoly
B. Monopolistic competition D. Perfect competition
9. Which type of market structures which is less competitive and only one
few firm enjoys the activity in the market?
A. Monopoly C. Oligopoly
B. Monopolistic competition D. Perfect competition
12. It can increase the cost of business operations and can threaten the
profitability of business enterprises at their initial stage of operations.
A. Cost of Sales C. Price
B. Expenditures D. Taxes
15. It is defined as the ability of any player in the market to significantly influence
the price in the market and the quantity to be produced or sold.
A. Market C. Products
B. Market Structures D. Seller
3
LESSON 1: Law of supply and demand, and how equilibrium price and
quantity are determined
WHAT’S IN
Have you tried buying goods on demand? Have you asked yourself why
the price is too high or too low? Do you believe that these form part in the
fundamental economic principle? In this lesson, you will discover why price
rises, goods falls down and vice-versa.
But before that, you have to unlock and familiarize first the unfamiliar
words that you will be encountering as you go along with the discussion in this
lesson.
WHAT’S NEW
4
WHAT IS IT
THE MARKET
DEMAND
Demand is the value of goods and services that buyers are willing to
purchase in every price. A demand schedule depicts the different quantities the
consumer is willing to buy at numerous prices. It centers on unlimited wants.
Qd = f(p)
This denotes that the quantity demanded for a good is reliant on the price
of that good. Presented in Table 1 is a hypothetical monthly demand schedule
for an empanada for one individual, Juan. The quantity demanded is
determinable in each price with the following demand function:
Qd = 6-P/2
5
At price P10, Juan is willing to buy one empanada for a given period. As
price goes down to P8, the quantity he is willing to buy goes up to two . At price
of P2, he will buy five. There is an indirect relationship between the price of a
commodity and the quantity demanded for that good. The lower price allows
the consumer to buy more, but as price rises, the amount the consumer can
afford to buy tends to go down.
SUPPLY
Table 1.2 Hypothetical Supply Schedule of James for Rice in One Week
As can be seen in Table 1.2, the relationship between the price of Rice
and the Quantity that James is willing to sell is direct. The greater the price, the
higher the quantity supplied.
6
THE LAW OF SUPPLY
Demand and supply can identify how the buying decisions of households
and the selling decisions of businesses interact in determining the price of a
product and the quantity actually purchased and sold. Market equilibrium is a
condition where demand is equal to supply. The equality means that the
quantity that sellers are willing to sell is also the quantity that buyers are willing
to purchase for a price. As a market experience, equilibrium is the stability of
market demand, supply and price. It is also an agreement between how much
buyers and sellers are willing to transact. Equilibrium price is the price in the
market at which demand and supply are equal. A shortage occurs when
quantity demanded surpasses quantity supplied. While a surplus occurs when
quantity supplied exceeds quantity demanded.
Where : P=price
Qd = Demand
Qs = Supply in thousands
50-2Qd = 20+4Qs
7
Table 1.3 Demand-Supply Schedule
8
WHAT’S MORE
9
WHAT I HAVE LEARNED
10
LESSON 2: Know the factors affecting demand and supply
WHAT’S IN
Supply and demand are essential in the market economy. Supply and
demand influenced each other and does impact the prices of consumer goods
and services within an economy. Rising and decreasing in commodities prices,
abundance and limited supply is well understood by analyzing the impact of the
factors affecting demand and supply. Sellers and consumers play a crucial role
as to how prices are determined. As sellers, it is important to know what are the
factors affecting consumers’ demand and to come up with better strategies in
delivering good quality products and services to consumers to ensure good
value for money. As buyers, it is important to know how sellers priced their
products based on the factors affecting supply and demand. Better
understanding of this aspect helps the consumers on making wise buying
decisions. In general, both sellers and buyers will have a better understanding
and grasp as to how buying and selling activities affects the economy as a
whole.
WHAT’S NEW
Directions: Classify and determine whether the given word is a factor affecting
supply or a factor affecting demand. Write S for factors affecting supply and
write D for factors affecting demand.
11
WHAT IS IT
The non-price factors once ceteris paribus assumption is dropped are now
allowed to influence demand. Cited below are the non-price factors affecting
demand:
1. Tastes and Preferences – Taste of the product affects the demand that
the buyer is willing to pay at a certain price. Once the product becomes
more desirable when it comes to the consumers taste and preferences
means the more products will be demanded at a certain price.
Unfavorable change in the consumer’s taste and preferences will lead to
decrease of the products demand.
12
Non-price Determinant of Supply
1. Price of Resources – The cost of production incurred by the firm is
determined and is affected by the prices of the resources used in the
production process. Increase of the resources prices also increases
the production cost, assuming a particular product price, it potentially
reduces the profits.
6. Number of Seller – The more the sellers are in the marketplace, the
greater the supply. The fewer the sellers mean there is less supply.
13
WHAT’S MORE
Student’s
explanation:____________________________________________________
______________________________________________________________
2. If there are more producers in the market, there will be a larger supply of
products/services.
Student’s
explanation:____________________________________________________
______________________________________________________________
Student’s
explanation:____________________________________________________
______________________________________________________________
Student’s
explanation:____________________________________________________
______________________________________________________________
5. When income rises, the demand for the product will increase, when income
falls, the demand for the product will decrease.
Student’s
explanation:____________________________________________________
______________________________________________________________
14
WHAT I HAVE LEARNED
1. What are the things you learned from the discussion? How can you apply
these learnings in your real-life activities?
2. Cite specific real-life scenario as to where you can use your learnings about
the factors of Demand.
3. Cite specific real-life scenario as to where you can use your learnings about
the factors of Supply.
15
ADDITIONAL ACTIVITIES
16
II. Directions: Identify the non-price determinants of demand from the following
statement. Select the answer from the given words below. Write the answer on
the space provided for each number.
- Change in expectations - Change in number of buyers
- Change in the price of related goods - Change in Buyer tastes
- Change in income
17
LESSON 3: Compare the prices of commodities and its impact on
consumers
WHAT’S IN
WHAT’S NEW
Directions: Compare the price below of the basic commodities and answer the
proceeding questions.
1 Sack 1 Sack
Rice Corn
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Questions:
1. With the two variety of rice shown above, which will you prefer? A sack
of rice priced at 2,400 or a sack of corn priced at 2,000? Why?
______________________________________________________________
______________________________________________________________
______________________________________________________________
____________________________________________________________.
2. What are the things will you consider when buying products?
______________________________________________________________
______________________________________________________________
______________________________________________________________
____________________________________________________________.
WHAT IS IT
19
Supply
Demand
There are things that you want to buy like cell phone, laptop, tablet, and
any gadgets you love to buy. Delicious food you can buy in the mall and in the
market. You want to buy wonderful dresses and stylist shoes. You want
expensive cars and motorcycle that fit your convenience. However there things
you buy for daily needs like rice, meat, beef, fruit, and vegetable.
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Basic commodities is different in prime commodities, basic commodities is the
thing that you really need while prime commodities the things you like to buy
for yourself.
Example:
Basic Commodities:
o Firewood
o Charcoal
o Cooking oil
o Salt
Prime Commodities
o Cell phone
o Cars
o Tablets
o Laptop
WHAT’S MORE
Direction: Apply the Law and supply in term of price of commodities. Write
INCREASE or DECREASE of price.
Product Price
1. Higher Demand
2. Lower Demand
3. Higher Supply
4. Lower Supply
21
WHAT I HAVE LEARNED
1. Cite specific products that you will still buy even though the price will increase.
Why?
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
_________________..
2. Cite specific products that you will not buy if the price will increase? Why?
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
_________________.
3. How does the price of the product influence your buying decision?
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
_________.
22
WHAT I CAN DO
Write here:
23
ADDITIONAL ACTIVITIES
Compare the following commodities and write the Basic Commodities and
Prime Commodities in separate column.
o Firewood
o Cars
o Tablets
o Cell phone
o Salt
o Laptop
o Charcoal
o Cooking oil
24
LESSON 4: Market Structures (perfect competition, monopoly,
oligopoly, and monopolistic competition)
WHAT’S IN
Before we proceed to the lesson, let’s unlock and familiarize first the unfamiliar
words that you will encounter as you go along with the discussion in this lesson.
P R I C E M A R K E T A V B E C E D R P S T S S E S
B S A D G O Q A S B T M A R K E T S T R U C T U R E
C C V E E N O N E I O L O R A S B A D I A S B E D C
A G R T Y O L I G O P O L Y C E U A B C C E D B C E
A E E R A P A G H R R E E S O E Y A F E E C S E S S
M O N O P O L I S T I C C O M P E T I T I O N B R E
O A D A L L A B E A V A M A P A R A R A A N A N E R
C S C V A B N M L O A B O S E V S S I K B S B O N I
E S A S Y A C T L E L L N V T B P R V E L U C T E U
C B U Y E R S H E O R E 0 B I C O V A R E M D H R O
F M E B R R R E R A Y T P E T E W T L E B E E N M S
I E B B S I J I N M R T O R I E E B R R N R F M I L
R P L A Y E R S R I O U L T O R R N Y E O H G L N Y
M E E S E R E A S E R E Y S N T E R E N P E N O D E
25
WHAT’S NEW
1. ___________________________________________________
2. ___________________________________________________
3. ___________________________________________________
4. ___________________________________________________
5. ___________________________________________________
6. ___________________________________________________
7. ___________________________________________________
8. ___________________________________________________
9. ___________________________________________________
10. __________________________________________________
11. __________________________________________________
12. __________________________________________________
13. __________________________________________________
14. __________________________________________________
15. __________________________________________________
26
WHAT IS IT
27
Perfect Competition
This is a type of market form in which there are more firms that sell the
same products or render services and no one has enough market power to be
able to set prices on the product or service without losing business as the
conditions for perfect competition are strict, there are only a few markets that
are considered to be perfectly competitive thus this market form only exist to
compare with other market forms.
Large number of buyers and sellers: There are many buyers and sellers
who will participate in the market at a given price.
No barriers to entry and exit: There are no barriers to entry and exit for
firms and firms are able to enter or leave the market without any issues.
Perfect information: All buyers are expected to know the price of the
product set by all sellers and sellers are supposed to know the production
process of their competitors.
Price taker: they have to go along with the market price
28
A. Monopolistic Competition:
A market structure which has large number of firms who offer
differentiated products. It is easy to enter/ exit in the market. It is characterized
both perfect competition and monopolistic competition. The only producers of
that specific products. It allows the firm to be price maker, it means that he/
she can set the price of their products depending on the differentiation on the
firm products. Examples: Restaurant like burger restaurant, pizza restaurant.
The both offer differentiated products yet the customer must choose only one
among them to feed his/ her stomach.
B. Oligopoly:
C. Monopoly:
29
WHAT’S MORE
A. Direction:
1. Cut out pictures from old magazine and paste it on the space
provided for, or draw a picture that best describe each market
structures and explain why?
1. MONOPOLY
(paste here)
2. OLIGOPOLY
(paste here)
3. MONOPOLISTIC
COMPETITION
(paste here)
4. PERFECT
COMPETITION
(paste here)
30
Rubric for Essay
Criteria Rating(5 is highest, 1 is smallest)
The pictures pasted were 5 4 3 2 1
appropriate for the topic being asked.
The explanation is concise and 5 4 3 2 1
relevant to the topics
Directions: Formulate/ create a situation in which you can easily connect the
market forms you’ve learned from this module and explain why?
1. Perfect Competition
1.1________________________________________________
________________________________________________
2.2________________________________________________
________________________________________________
2. Monopolistic Competition
2.1________________________________________________
________________________________________________
2.2________________________________________________
________________________________________________
31
3. Monopoly
3.1 ________________________________________________
________________________________________________
3.2________________________________________________
________________________________________________
4. Oligopoly
4.1________________________________________________
________________________________________________
4.2________________________________________________
________________________________________________
32
WHAT CAN I DO?
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
33
LESSON 5: Effects of contemporary issues such as migration,
fluctuations in exchange rate, oil price increases, unemployment,
peace and order, etc. on the purchasing power of the people.
WHAT’S IN
Let us recall from the previous lesson, regarding market structures. The
interaction of demand and supply with consequent determination of the price is
set in an environment called a market. More than a place or state where
transactions are made between sellers and buyers. Market power is defined as
the ability of any player in the market to significantly influence the price in the
market and the quantity to be produced or sold. The aim of every player is to
enhance its market power in order to increase its profit for producers, and
satisfaction, for the consumers. A Filipino who wants to engage in any business
or become an entrepreneur should know the characteristics of the market he is
trying to enter.
WHAT’S NEW
1. GRAOINTMI __________________
2. TENMYOLNUEMP __________________
34
3. GXEHANEC ATER __________________
WHAT IS IT
Migration
Economic migration forms a large part of the reason why people migrate.
Discretions to transfer can be influenced by high poverty in the country or
area of origin. Through the social systems, people receive information from
people who already migrated to other cities or countries.
35
What are the causes of migration?
1. Poverty
2. Unemployment
3. Improve standard of living
4. Higher Salary
5. Economic Security
Unemployment
For example, the Philippine peso (PHP) in a United States dollar (USD)
in 2018 was almost P53.1424 per $ 1. The peso rate of a Japanese yen
(JPY) in 2018 was almost P0.46787 per ¥ 1. The pesos rate of Thailand
(baht) in 2018 was almost 1.6259 per TBH.
Under the fixed exchange rate, the exchange rate may also decrease.
This event is called a devaluation where the local currency amount of
currency is decreasing in other countries. This is contrary to revaluation
where the value of local currency in other countries is increasing. In these
cases, there may be devaluation or revaluation only if the government
announces it.
36
Oil Price Increases
During big-time oil price increases in the country, you can hear everyone
complaining about how harder it will be to make ends meet. Some will go to the
extent of politicizing the price increase just to be able to throw some blames to
the President. It’s more than a peso increase per liter. People are complaining
because whenever there is an increase in gasoline there is a tendency of
decreasing purchasing power and spend less on the disposal of income.
A condition of peace and order enables the growth of funds, generates more
employment opportunities and attracts more tourists. Peace is the absence of
aggression and is characterized by healthy social and international connections,
fairness and parity.
WHAT’S MORE
________________________________________________________
37
3. Why should Entrepreneur pay the employee a salary based on
minimum wage?
________________________________________________________
________________________________________________________
_
First Impression
Terms Explanation
1. Oil price
2. Unemployment
3. Exchange Rate
4. Migration
38
Questions:
1. What do you think are the influences of the above term on the present
situation of the economy?
________________________________________________________
________________________________________________________
________________________________________________________
_________________________________
39
WHAT I CAN DO
Know Me More
__________________
__________________
Migration __________________
__________________
________
Contemporary Unemploy
Economic Issue ment
__________________
__
__________________
__________________
Oil price __________________
increase ______
______________________
______________________
______________________
______________________
____
Rubrics:
Organization 10pts.
Cohesion of ideas 10pts.
Grammar 5pts.
25pts.
40
ASSESSMENT
Name:___________________________________________ Score:_______
Date: _______
Multiple Choice: Encircle the letter that corresponds to the correct answer.
2. It means that all other related variables except those that are being
studied at the moment and are held constant.
B. Ceteris Paribus C. Market Equilibrium
B. Income Effect D. Substitution Effect
4. There are Filipinos affected behaviours in buying an item when they see it
in the commercial on television. What is this term?
A. Advertisement C. Preferences
B. Demand D. Value of Money
41
8. Which type of market structures which is more competitive and many
sellers/producers competing each other with the same products?
A. Monopoly C. Oligopoly
B. Monopolistic competition D. Perfect competition
9. Which type of market structures which is less competitive and only one
few firm enjoys the activity in the market?
A. Monopoly C. Oligopoly
B. Monopolistic competition D. Perfect competition
11. It is an asset or something we purchased in the past and hope to will have
an income in the future.
A. Building C. Land
B. Investments D. Market
12. It can increase the cost of business operations and can threaten the
profitability of business enterprises at their initial stage of operations.
A. Cost of Sales C. Price
B. Expenditures D. Taxes
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43
What I Know
1. A
2. B
3. B
4. A
5. A
6. D
7. C
8. D
9. A
10. C
11. A
12. A
13. C
14. C
15. A
Module 2: Lesson 1
ANSWER KEY
44 What I Have Learned
What’s More
1.a – A
1.b – B
2.a – B
2.b – A
3.a – B
3.b – A
4.a – B
4.b – A
5.a – B
D O S M I C M I C S E R V I C E S T H G R M U N D L
E B I H G G H S D E Q W E R T A U Y O L G A W H E A
M W N J F F J A F D Q U A N T I T Y U S B R R Y R W
A T G K D D K Q WS W A C R E K J D A U Q K T G T A
N Y U L S S L WS U P P L Y U E G R N J U E G T T S
D O L P R E L A T I V E A B U T M A N C A T L D H D
N P A O Z A P E H F T S B Q I T D A I H N T Z O G F
L E Q U I L I B R I U M M O T J J R F T U S G G F
K N I U C X I T K R U F M A P H U B I K I Y F L G Y
G O O D S E E I B N O H K D K P R I C E F C E R E J
What’s New
45
What’s New
1. S
2. D
3. D
4. S
5. S
6. D
7. S
8. D
9. D
10. S
Module 2: Lesson 2
Demand-Supply Schedule
D S P
38 19 1
36 23 2
34 27 3
32 31 4
30 35 5
28 39 6
26 43 7
24 47 8
22 51 9
20 55 10
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Module 2: Lesson 3
Additional Activities
I.
1. Change in expectations
2. Change in prices of other goods
3. Change in number of supplies
4. Change in taxes and subsidies
5. Change in technology
6. Change in resource prices
II.
1. Change in buyer tastes
2. Change in number of buyers
3. Change in income
4. Change in the price of related
goods
5. Change in expectations
The teacher will provide a rubric.
What I Have Learned
The teacher will provide a rubric.
What’s More
What’s New
Activity 1
Answers of the students are facilitated by the Teachers the way the students give their
explanation and give respective points.
Rubrics
10 Points 6 Points 3 Points 0 Points
The statement is The statement is The statement No Answer
correct. closer to the slightly closer to
answer. the answer.
What’s More
Answers of the students are facilitated by the Teachers the way the students give their
explanation and give respective points.
Rubrics
10 Points 6 Points 3 Points 0 Points
The statement is The statement is The statement No Answer
correct. closer to the slightly closer to
answer. the answer.
47
What I Can Do
Answers of the students are facilitated by the Teachers the way the students give their
explanation and give respective points.
Rubrics
10 Points 6 Points 3 Points 0 Points
The statement is The statement is The statement No Answer
correct. closer to the slightly closer to
answer. the answer.
Additional Activities
Tablets Salt
Cars Firewood
48
49
The teacher will provide a rubric.
What I Have Learned
The teacher will provide a rubric.
What’s More
The teacher will provide a rubric.
What’s New
P R I C E M A R K E T A V B E C E D R P S T S S E S
B S A D G O Q A S B T M A R K E T S T R U C T U R E
C C V E E N O N E I O L O R A S B A D I A S B E D C
A G R T Y O L I G O P O L Y C E U A B C C E D B C E
A E E R A P A G H R R E E S O E Y A F E E C S E S S
M O N O P O L I S T I C C O M P E T I T I O N B R E
O A D A L L A B E A V A M A P A R A R A A N A N E R
C S C V A B N M L O A B O S E V S S I K B S B O N I
E S A S Y A C T L E L L N V T B P R V E L U C T E U
C B U Y E R S H E O R E 0 B I C O V A R E M D H R O
F M E B R R R E R A Y T P E T E W T L E B E E N M S
I E B B S I J I N M R T O R I E E B R R N R F M I L
R P L A Y E R S R I O U L T O R R N Y E O H G L N Y
M E E S E R E A S E R E Y S N T E R E N P E N O D E
What’s In
Module 2: Lesson 4
What I Can Do
Module 2: Lesson 5
What’s New
What’s More
What I Can Do
50
References
Books
Rosemary P. Dinio, PhD and George A. Villasis. Applied Economic First Edition.
Quezon City: Rex Book Store Inc., 2017.
Tereso S. Tullao Jr., PhD. Applied Economics for Progressive Philippines. Quezon
City: Phoenix Publishing House, Inc. 2018
Dinio, Rosemary P., PhD & Villasis, George A. (2017). Applied Economics.
Sampaloc,Manila: Rex Book Store, Inc.
Websites
https://www.myaccountingcourse.com/accounting-dictionary/commodity
https://dictionary.cambridge.org/example/english/basic-commodity
https://www.investopedia.com/ask/answers/06/commodityprices.asp
https://www.theijbmt.com
https://www.opentoexport.com/article/cap
https://simple.wikipedia.org/wiki/Perfect_competition
https://www.wikizero.com/simple/Perfect_competition
https://kids.kiddle.co/Perfect_competition
https://www.coursehero.com/file/p65h8c/Oligopoly-an-industry-structure-in-
which-there-are-a-few-firms-producing/
https://courses.lumenlearning.com/boundless-economics/chapter/introduction-
to-monopoly/
https://quizlet.com/141857191/micro-short-answer-q1-flash-cards/
https://search.creativecommons.org/
51
https://www.getrealphilippines.com/2018/10/oil-price-hike-nanaman/
https://www.investopedia.com/terms/p/purchasingpower.asp)
(https://bizfluent.com.Marketing)
https://www.bartleby.com/essay/Importance-of-Peace-and-Order-Law-in-
PK4WCYE3RZZAhttps://www.bir.gov.ph/index.php/tax-information.html
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