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Module 03: Market Demand, Market Supply and Market Equilibrium

This document provides an overview of market demand, supply and equilibrium. It begins by outlining the key learning objectives which are to determine the concepts of market demand, supply and equilibrium; state the laws of demand and supply; construct and analyze demand and supply curves; and solve problems involving demand, supply and equilibrium. It then presents the concepts of demand, supply, the laws of demand and supply, demand and supply curves, and how equilibrium price is reached at the point where the supply and demand curves intersect. The document concludes by outlining a summary of the lesson, providing example problems and questions to illustrate the concepts, and listing additional resources for further reading.

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Christian Zebua
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932 views8 pages

Module 03: Market Demand, Market Supply and Market Equilibrium

This document provides an overview of market demand, supply and equilibrium. It begins by outlining the key learning objectives which are to determine the concepts of market demand, supply and equilibrium; state the laws of demand and supply; construct and analyze demand and supply curves; and solve problems involving demand, supply and equilibrium. It then presents the concepts of demand, supply, the laws of demand and supply, demand and supply curves, and how equilibrium price is reached at the point where the supply and demand curves intersect. The document concludes by outlining a summary of the lesson, providing example problems and questions to illustrate the concepts, and listing additional resources for further reading.

Uploaded by

Christian Zebua
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Module 03: Market Demand, Market Supply and Market Equilibrium

I. LEARNING COMPETENCIES
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.

II. LESSON PRESENTATION


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.
In economics, there are terms that you must learn to understand the better market
situations. A demand or 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. Price is what a buyer
pays for a unit of the specific good or service. The total number of units purchased at that price
is called the quantity demanded.

Law of Supply and Demand


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.

The Law of Demand

Image 3.1. The Demand Curve (Source: DepEd Applied Economics Module by Dela Cruz et al.)
The Law of Supply

Image 3.2. The Supply Curve (Source: DepEd Applied Economics Module by Dela Cruz et al.)

How Do Supply and Demand Create an Equilibrium Price?

Image 3.3. The Equilibrium Curve (Source: DepEd Applied Economics Module by Dela Cruz et al.)
III. SUMMARY OF LESSON
 The law of supply and demand shows the relationship between the availability of a
particular product and the desire (or demand) for that product has on its price.
 The law of demand says "The higher the price, the lower the quantity demanded and vice
versa."
 The law of supply says "The higher the price, the higher the quantity supplied and vice
versa."
 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.
 The equilibrium price and equilibrium quantity occur where the supply and demand curves
cross.

IV. ENGAGEMENT ACTIVITY


A. Think, Learn and Challenge Opportunity
Direction: Read and analyze the passage below and answer the following questions. (2 pts.
each)

1. Under the dowry system in India, a market with more women seeking partners, the trade
shift favors the men. What law or economic principle is applicable?

2. In the same system, men with better jobs receive larger payments. What economic principle
is applicable to this situation? Justify your answer.

3. State the law of demand.


4. State the law of supply.

B. The Law of Demand


Direction: Analyze the problem. The following data were taken from an invoice of Company X.
The company imports gasoline from other country.
Plot or graph the data. (5 pts.)

Figure 1. Price and Quantity Demanded of Gasoline


(Legend: P – Price; D- Demand; Qd –Quantity Demanded)
Describe and interpret the curve. (5 pts.; 3 - Quality of Analysis, 2 – Organization of ideas)
C. The Law of Supply
Direction: Analyze the problem. The following data were taken from an invoice of Company X.
The company imports gasoline from other country.
Plot or graph the data. (5 pts.)

Figure 2. Price and Supply of Gasoline


(Legend: P – Price; S- Supply; Qd –Quantity Demanded)
Describe and interpret the curve. (5 pts.; 3 - Quality of Analysis, 2 – Organization of ideas)

D. The Equilibrium Price


Direction: Using the data Activity A and Activity B, determine the equilibrium point of the
demand and supply curves. Plot its graph. (5 pts.).
Figure 3. The Equilibrium Price of Gasoline
(Legend: P – Price; D- Demand; S- Supply; Qd –Quantity Demanded)

What is the equilibrium price? (5 pts.)

V. ENRICHMENT
Our case today can be compared to our topic. Let us understand that everything has
limitations in our consumption – our basic needs like food, shelter and water. Even our
consumption on the mode of transportation has limitation.
The challenge to us, consumers, is how we make use of our imitative, and utilize our
income to satisfy our demands at the most affordable prices; for the sellers to supply the needs
of the consumers while making profit; for the government to legislate the economy while
helping all the agents and to protect the monetary and fiscal transactions.
As a consumer, how can you sustain your needs (basic commodities) despite the
challenges in increased price of these items in the market? Answer in 5-10 sentences. (10 pts.; 7
- Quality of Ideas, 3 - Organization of Ideas)
VI. EVALUATION
A. True or False
Direction: Write TRUE if the statement is correct and FALSE if incorrect. Write your answer
before the number. (2 pts. each)
________1.The upward slope of the supply curve illustrates the law of demand―”higher price
leads to a higher quantity supplied, and vice versa.”
________2.The downward slope of the demand curve illustrates the law of supply—“the
inverse relationship between prices and quantity demanded.”
________3.Time is important to supply because suppliers must react quickly to a change in
demand or price.
________4.A shift in a demand or supply curve occurs when quantity demanded or supplied
changes even though price remains the same.
________5.The law of supply says that ―at higher prices, sellers will supply more of economic
goods.

B. Multiple Choice
Direction: Encircle the letter of the correct answer. (2 pts. each)
1. An increase in the price of electricity bill will force you to:
a. increase your demand for kerosene heaters and coal.
b. increase your demand for light bulbs and aircon.
c. increase your demand for stereos and videokes.
d. increase your demand for TVs and use of gadgets.
2. The market demand curve for apple shows the
a. effect on market supply of a change in the demand for apple
b. quantity of an apple that consumers like to buy at different prices.
c. marginal cost of producing and selling different quantities of an apple.
d. effect of advertising expenditures on the market price of an apple.
3. Economies experience an increased in unemployment and a reduced of activity during
recession. How does recession affect the market demand for new cars?
a. Demand for new cars shifts to the right.
b. Demand for new cars shifts to the left.
c. Demand for new cars has no shift
d. Demand for new cars either has or no shift
4. The market supply curve for gasoline shows the
a. effect on market demand of a change in the supply of gasoline.
b. quantity of gasoline that firms offer for sale at different prices.
c. quantity of gasoline that consumers are willing to buy at different prices.
d. All of the above are correct.
5. If Toyota firm is producing a car faster than people want to buy, there is
a. an excess supply of car and price can be expected to decrease.
b. an excess supply of car and price can be expected to increase.
c. an excess demand of car and price can be expected to decrease.
d. an excess demand and price can be expected to increase.
C. Solving Problem and Critical Thinking Analysis
Direction: Analyze the problem carefully. In December, the price of “hamon”‖rises and the
number of “hamon”‖ sold also rises. Is this a violation of the law of demand? Justify your
answer. Answer in 5-10 sentences. (10 pts.; 7 - Quality of Ideas, 3 - Organization of Ideas)

VII. RESOURCES
Dela Cruz et al. DepEd Applied Economics Module. Division of City Schools Manila.
https://www.ducksters.com/money/supply_and_demand.php
https://www.investopedia.com/terms/l/law-of-supply-demand.asp
https://www.thoughtco.com/calculating-economic-equilibrium-1147698
https://www.ducksters.com/money/supply_and_demand.php
https://www.nytimes.com/2011/08/07/business/economy/marriage-and-the-law-of-supply-anddemand.html
www.kahanasunset.com
https://global.oup.com/us/companion.websites/9780199811786/student/chapt2/multiplechoic

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