Lesson 13: Demand
Demand is defined as the quantity of a product that
buyers are willing to buy. Under normal conditions,
consumers will buy more if prices are low and buy less
if prices are high.
The quantity demanded values are rates of
purchases at alternative prices.
Demand curve is a graphical representation of the
inverse relationship of price and quantity of products
which the consumer is willing to buy.
Demand schedule is the quantity of the product
demanded by consumers.
Shift in the demand curve means a change in the
entire demand curve, due to the factors like income,
population, taste/preferences, and speculations
•
Rightward shift: reflects an increase in
actual demand at every price level
o
Changes in the non price factors

Increase in income

Greater taste/preference

Increase in population

Greater speculation
•
Leftward shift is a decrease in consumer’s
incomes; a decrease in the price of a
substitute good that may cause all the actual
demand to decrease.
o
Changes in the non price factors

Decrease in income

Less taste/preference

Less in population

Less speculation
Change in demand: shifts in the demand curve
Law of Demand states that as quantity demanded
increases, the price decreases; as the price increases,
quantity demanded decreases while other factors
remain constant.
People do less as the cost of doing it rises.
Determinants of Demand:
•
Population
•
Preference
•
Income
•
Occasion
•
Price of related products (substitute &
complementary)
Lesson 14: Supply
Supply is defined as the quantity of a product that
sellers are willing to sell.
Supply schedule shows the quantities that are offered
for sale at various prices.
The aggregate supply quantities of a group of sellers
are presented as a market supply schedule.
Supply curve is a graphical representation that
contains the exact prices and quantities in the supply
schedule. It shows a direct relationship between price
and quantity supplied.
Law of supply states, “other things assumed as
constant, price and quantity supplies are directly
proportional
Non price determinants/Factors that affect supply
•
Cost of production
•
Availability of economic resources
•
Number of firms in the market
•
Technology applied
•
Weather/climate
•
Price related goods/products
•
Expectations/speculation in the price
increase
•
Subsidy-help of financial from gov’t/financial
assistance
Ceteris paribus assumption, these factors are again
assumed constant to enable us to analyze the effect of
a change in price on quantity supplied. Changes in non
price factors shall now take place. Assuming other
things are constant
Shift of the supply curve is a means of increase or
decrease in the entire supply.
•
Rightward shift: effect of an increase in
supply caused by a change in a non price
factor
•
Leftward shift: reflects a decrease in the
supply
Lesson 15: Market Equilibrium
The point of equilibrium is subject to change. Shifts in
either the demand curve alone, or the supply curve
alone, or both the demand and supply curves at the
same time can cause in the equilibrium point.
Demand = Supply
Consumers = sellers
Relationship between price f goods and Quantity
demand/supplied
•
Price of goods & Quantity demanded
o
Inversely proportional
•
Price of goods & quantity supplied
o
Directly proportional
Lesson 16: Elasticity of Demand and Supply
Demand and supply may be described as:
1. Elastic- when a change in a determinant
leads to a proportionately greater change in
quantity of demand or supply. Price changes
even a little
2. Inelastic-when a change in determinant
results in a proportionately lesser change in
the quantity of demand or supply. Price
changes even a lot
3. Unitary elastic-when a change in a
determinant leads to a proportionately equal
change in the quantity of demand or supply.
Quantity change=price change
Types of elasticity of demand
1. Price elasticity: a study of responsiveness
of demand to changes in the price of the
good.
ep=% change in quantity demanded
% change in price

2.
3.
TR(Total Revenue)- is equal to
price times quantity
i. Elastic: TR increases
while price decreases
ii. Inelastic: TR decreases
as price decreases
iii. Unitary elastic: TR
remains constant despite
a change in price and
marginal revenue is zero.
Income elasticity: a study of the
responsiveness of demand to a change in
consumer income. Amount response to a 1%
change in income
 (+) for normal goods
 (-) for inferior goods
ey= % change in quantity demanded (QD)
% change in income (Y)
Cross elasticity: relates to a percentage in
the demand for a good with a percentage
change in the price of another good. Amount
response to a 1% change in the price of
another good
 (+) for substitutes
 (-) for complements
Price elasticity of supply refers to a percentage
change in the quantity supplied with a percentage
change of the good. 1% change in its price
2 functions
1. Supply function: a relationship between
supply and those factors that affect the
willingness and ability of a supplier to offer a
good for sale
Ex. Equation: /-400+80P/=Qs
2.
Demand function: responds to changes in
their determinants, goods differ in the degree
of their responsiveness
Ex. Equation: 200-10P=Qd
Qd-dependent variable
P-independent variable
Qd changes price changes
Handout:
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
Recall of the cost-benefit principle- pursue an
action (if and only if) benefits are at least as great
as it costs
Recall the reservation prices- highest price
willing to pay
Total expenditure equals- number of units sold
Total expenditure=Total Revenue

Dollar amount …:
Consumers spent=sellers receive
Law of demand and total expenditures

Depends on price elasticity of demand

Price rises=total expenditure(increase,
decrease or stays the same

Prices rises=demand falls

Prices falls=demand rises
Elastic products

Qd is highly responsive

Percentage change in quantity
dominates

Increase in price=reduce total
expenditure




Decrease in price=increase in total
expenditure
Inelastic products

Qd is not responsive

Percentage change in price dominates

Increase in price=increase total
expenditure

Decrease in price=decrease in total
expenditure
Determinants of elasticity

Substitution possibilities

Budget share

time
Perfect elasticity

Perfectly elastic demand

P.E.D is infinite

Change in price leads
consumers to find substitutes

Perfectly Inelastic demand

P.E.D is zero

Consumers do not switch to
substitutes even when price
increases dramatically
*P.E.D- price elasticity of demand

Determinants of supply elasticity

More easily additional units=higher the
price elasticity (more elastic)

Flexibility of inputs

Mobility of “

Ability to produce substitute “

Time

Unique and essential “
 Perfect elasticity (of supply)

Perfectly inelastic

E.S is zero

Price (high/low)=same
amount is available

Perfectly Elastic

E.S is infinite

Same combinations of inputs
purchased at the same price
*E.S.-elasticity of supply
IBON (facts and figures)
Conditional cash transfer(CCT)- programa ng
gobyerno. Binibigyan ng pampinansyang suporta and
pinakamahihirap na pamilya.
Pantawid [amilyang Pilipino program(4Ps)- ito and
bersyon ng programming CCT sa bansa.
Ipinakilala ng World Bank and kosepto ng CCT sa
Pilipinas noong 2006.
Nagpadala ng mga kinatawan ang gobyerno ng
Pilipinas sa Third International conference on CCT sa
Turkey.
Simlang bilang ng mga benepisyaro-4, 587
Target na bilang ng benepisyaryo- 4.6 million
2 layunin/ objectives
1. pagbibigay ng cash/cash assistance
2. panlipunang pag-unlad para matigil ang
kahirapan/poverty alleviation
6 na kondisyon/conditions

regular check-up ng mga
nagdadalang-tao

pagdadalo sa mga family
development sessions/family
planning

0-5-nabgyan ng preventive health
check up at mga
bakuna/vaccination

3-5-pumapasok na sa daycare o
pre-school

6-14-naka-enrol sa elementarya o
hayskul

6-14-nabigyan ng pampapurga 2
beses kada taon
Dep’t of Social welfare and development (DSWD)ahensya ng gobyerno na nagpaptupad at
nangangasiwa sa programming CCT sa Pilipinas.
National Statisical Coordination Board (NSCB)
2 paraan para matanggap ang CCT
•
•
Automated teller machine(ATM)
Midwife o DSWD staff
Mga nagpopondo sa CCT
•
World Bank
•
Asian Development Bank (ADB)
•
Australian Agency for International Aid
(AusAid)
•
Japan International Cooperation
Agency(JICA)
•
United Nations Development Program
(UNDP)
Benepisyaryo-taong tumatanggap ng CCT
Progresa- programming CCT sa Mexico.
Local gov’t unit- tumutulong sa DSWD para matukay
ang mga benepisyaryo ng CCT
Kapit-Bisig Laban sa Kahirapan---Comprehensive
and Intergrated Delivery of Socil services (KALAHICIDSS)
70%-meet their daily needs w/ just P86
30%-meet their daily needs w/ just P41 or less
7 concerns:
1. exclusive
2. social infrastructure to support in
implementation is lacking
3. short term income
4. increase debt
5. smokescreen or mask
6. COIN program
7. might be well for political gain
CCT is a dole-out program because beneficiaries get
money in exchange for something unrelated to their
labor as productive individuals
Dep’tof Finance (DoF)- places the country’s total
accumulated debt to the world bank
Armed Forces of the Phil.(AFP)- incorporating
“pseudo-development” projects
Max. amount that CCT beneficiaries received monthlyP 1400
The review of MiIllenium Development Goals(MDGs)
will happen on the year 2015
CCT budget- P21.2 billion
Total foreign funding of CCT- $808.85 million
Philippines total households- 19 million
John Matthews- found that poor planning is creating
one of the biggest water-related threats
Hydrological cycle includes:
•
surface and ground sources
•
glaciers
•
precipitation
•
run-off and vaporization
The Hoover dam-was designed based on a 30-year
period.
Terrorists attacked a US commercial aircraft towards
the Twin towers in New York city.
•
•
•
•
•
•
•
•
120 countries-US military launched various
forms
60 000- number of U.S elite forces
250 000- civilians who died
601 000- Iraqi civilians who died
7.8 million- number of internally-displaced
US $6 trillion- financial cost of the US war
US $17.2 billion- profits of Halliburton
US $1.17 trillion- cost of defense contracts