ACTIVITY SHEETS IN ECON 101: APPLIED ECONOMICS

(Week 3 - Market Demand, Markey Supply and Market Equilibrium)

Name: Keefe P. Mentino Yr.&Sec.: 12-ABM Inclusive Dates: Jan. 25-29,2021

PART I. GRAPH ANALYSIS
Directions: Please analyze the graph and answer the questions below.

a) Locate the equilibrium point on the demand

and supply graph. Put a point on the graph

ANSWER:

b) If the price is above the equilibrium level, what could you predict
with the demand and supply? I can predict that there is an
oversupply. The quantity that is supplied is greater than the
quantity demanded.

c) If below the equilibrium point what could you predict with the
demand and supply? I can predict that there is a scarcity or
shortage of supply. The quantity that is supplied is less than the
quantity demanded.

PART II. FILL IN THE BLANKS

Directions: Analyze the following statements carefully. Fill in the blanks.

1. The law of demand applies during online sales of shoes; that is when
consumers rush to buy products at 50% discounts.

2. The law of supply applies when the producers supply more pineapple
juices at a higher price; selling at higher quantity at a higher price
increases revenue.
 LOOKING BACK TO YOUR LESSON

Last module, we discussed the issues on the factors of production and how
these affect the economy, the basic problems facing the local and global
economics, and the roles of economics in solving these problems.

Identification. Identify the following problems that may exist in the local
and global economies during production of goods and services. Choose
from the factors below. Just write the letter.

Questions: If the economic problem is focused on

1. C the legalities of the production

2. B the nature of goods to produce
3. A the allocation of the products among members of the society
4. D the method of production of products

A. Whom to produce C. What provision to implement

B. What to produce D. What method or strategy is

effective and efficient

Directions: Let’s analyse this passage. This will help you understand
our new topic on demand, supply and equilibrium. Please read
carefully the passage and answer the question below.

Supply, Demand and Marriage By

 Robert H. Frank

In some cultures, romance isn’t nearly as important as cash when it

comes to choosing a marriage partner. And even when money plays
no explicit role in selecting a mate, courtship customs are governed
by the venerable economic model of supply and demand. Under the
dowry system in India, for example, parents of older brides would
typically pay more to prospective grooms. Men with better jobs would
receive larger payments, too. In short, there really is a marriage
market in many countries around the world, and economic principles
apply to it. In markets with a preponderance of women seeking
partners, the terms of trade shift in favor of men. If more men are
seeking partners, the reverse is true.
https://www.nytimes.com/2011/08/07/business/economy/marriage-and-the-law-of-
supplyanddemand.html

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?
ANSWER:
The economic principle applicable to the above passage is the law of
demand. It stated that if majority of the market are women seeking
partners, the trade shift is in favor of men. It just simply means that
in this case, there is an excess demand for grooms or men. The
quantity of men left are lower, therefore the price of dowry for them is
higher. This is in accordance to the law of demand in economics
which teaches us that an excess demand for a good, the price rises.

2. In the same system, men with better jobs receive larger payments.
What economic principle is applicable to this situation? Justify your
answer.
ANSWER:
The economic principle applicable to this situation is the law of
supply. It stated that men with better jobs receive larger payments.
In this case, men there would strive for better jobs so that they’ll
receive larger payments. Since they knew that as their job quality
gets better, the payment to them will also be higher, they’ll try to
achieve a better job so that they can attain that high level of larger
payments for the dowry. This is in accordance to the law of supply
wherein as a product’s price increases, production of that product
 will also increase or to that suppliers will also be more willing to
increase their production.

3. State the law of demand.

ANSWER:
The law of demand states that the higher the price, the lower quantity
demanded, and vice versa.

4. State the law of supply.

ANSWER:
The law of supply states that the higher the price, the higher the
quantity supplied, and vice versa.

Activity 2. The Law of Demand and Supply

Directions: Analyse this problem. The following data were taken from an
invoice of Company X. The company imports gasoline from other country.

2.1) Plot or graph the data. Interpret the results.

Price Quantity Demanded

($ per gallon) (millions of gallons)
1.00 800
1.20 700
1.40 600
1.60 550
1.80 500
2.00 460
2.20 420

Table 1. Price and Quantity Demanded of

Gasoline

GRAPH:

Price
2.
P
 8
2.
6 $2.20 / gallon – 420 million gallons
2. D
4 $2.00 / gallon – 460 million gallons
2.
2 $1.80 / gallon – 500 million gallons
2.
RICE ($) PER GALLON

0
1. $1.60 / gallon – 550 million gallons
8
1. $1.40 / gallon – 600 million gallons
6
1. $1.20 / gallon – 7000 million gallons
4
1.
$1.00 / gallon – 800 million gallons
2
1.
0
0.
8
0.
6
0.
4
40 45 50 55 60 65 70 75 80 85 90
0 0 0 0 0 0 0 0 0 0 0

QD- QUANTITY OF GASOLINE (MILLIONS OF GALLONS)

Figure 1. Price and Quantity Demanded of Gasoline

Legend: P – Price; D- Demand; Qd –Quantity Demanded

2.2 Analyze data and describe the curve.

ANSWER:

The following graph shows a downward sloping curve. It is true to that a

demand curve is always downward sloping due to the law of diminishing
marginal utility. It follows the law of demand that as soon as the price
increases, the quantity demanded decreases, but if the price decreases, the
quantity demanded increases. See to it in this graph that a price of $1 per
gallon generates the most amount of quantity demand while a price of $2.2
per gallon generates the least amount of quantity demand.

Activity 3. Problem Solving

 Directions: Analyze the problem. The following are sets of data taken from
the invoice of Company X. The company imports gasoline from other
country.

3.1) Plot or graph the data.

GRAPH:
Price
2.
8
2.
6
2. S
4
2.
PRICE ($) PER GALLON

$2.20 / gallon – 720 million gallons

2
2.
$2.00 / gallon – 700 million gallons
0
1.
8 $1.80 / gallon – 680 million gallons
1.
6 $1.60 / gallon – 640 million gallons
1.
$1.40 / gallon – 600 million gallons
4
1.
$1.20 / gallon – 550 million gallons
2
1.
0 $1.00 / gallon – 500 million gallons
0.
8
0.
 6
0.
4
40 45 50 55 60 65 70 75 80 85 90
0 0 0 0 0 0 0 0 0 0 0

QD- QUANTITY OF GASOLINE (MILLIONS OF GALLONS)

Figure 1. Table 2. Price and Supply of Gasoline

Legend: P – Price; S- Supply; Qd –Quantity Demanded

3. 2 Analyze data and describe the curve. Interpret the results.

ANSWER:
The following graph shows an upward sloping curve. It is true to that a
when plotting a supply graph, the slope always rises. It follows the law of
supple that as soon as the price increases, the more the amount of quantity
will be supplied by the suppliers, but if the price decreases, the less the
quantity that will be supplied by the suppliers. See to it in this graph that a
price of $1 per gallon generates the least amount of quantity supplied with
500 million gallons of gasoline. As the price per gallon increases, the
quantity supplied also increases. It is evident to the fact that a price of $1.4
per gallon generates a higher quantity supplied of 640 million gallons and
the highest price of $2.2 per gallon generates the most amount of quantity
supplied at 720 million gallons.

3.3) Using the data from demand and supply,

a) Determine the equilibrium point of the demand and supply curves.

GRAPH:

Price
PRICE ($) PER GALLON

2.
8
2. EXCESS SUPPLY
6 OR SURPLUS
2. S
4
2.
2
2.
0 ABOVE-EQUILIBRIUM PRICE
 1.
8
1.
6 EQUILIBRIUM PRICE
1.
4 BELOW-EQUILIBRIUM PRICE
1.
2
1.
0
0. D
8 EXCESS DEMAND
0. OR SHORTAGE
6
0.
4
400 450 50 550 600 65 700 750 80 850 900
0 0 0

QD- QUANTITY OF GASOLINE (MILLIONS OF GALLONS)

Figure 3. The Equilibrium Price

b) How much is the price in the equilibrium point? Present your

solution here.

Solution:

By the graph above, we can plot where the equilibrium point is

and how much is the price. It is the point wherein the supply
and demand curve meet or intersect. In this particular case, the
curves met at the price of $1.4, generating 600 million of
gasoline as the quantity.

Answer:
The two curves intersect at a price of $1.40 which is the
equilibrium point of the two curves.
 CHECK YOUR UNDERSTANDING

Let us check your understanding on the topic. Have fun!

Fill in the Blanks.

Directions: Read the sentences and fill in the blanks.
1. The law of supply and demand explain the interaction between the
sellers of a resource and the buyers for that resource.
2. The law of supply states that, higher the price, the higher the
quantity supplied.
3. A movement refers to a change along a curve.
4. A shift in a demand or supply curve occurs when a good's quantity
demanded or supplied changes even though price remains constant.
5. When Supply and demand are balanced, it is called equilibrium.
6. The law of demand states that ―the higher the price, the lower the
quantity demanded.

POST-TEST

PART I True or False

Directions: Write TRUE if the statement is correct and FALSE if incorrect.

Write your answer before the number.

FALSE 1.The upward slope of the supply curve illustrates the law of
demand— ―higher price leads to a higher quantity supplied, and vice
versa.
FALSE 2.The downward slope of the demand curve illustrates the law of
supply—the inverse relationship between prices and quantity
demanded.
TRUE 3.Time is important to supply because suppliers must react quickly
to a change in demand or price.
TRUE 4.A shift in a demand or supply curve occurs when quantity
demanded or supplied changes even though price remains the same.
TRUE 5.The law of supply says that ―at higher prices, sellers will supply
more of economic goods.

PART II Multiple Choice Questions

Directions: Read the sentences carefully. Encircle the correct answer.

6. 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.

7. 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.

8. 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

9. 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.

10. 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.

PART III. Solving Problem and Critical Thinking Analysis

Directions: 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:
No, this is not a case of a violation to the law of demand. This
is a case in a peak season with a possibility of excess
demand, that’s why it does not violate the law. It is not just a
simple move in the demand curve. During December, hamon
is on its peak season, rising its demand. It then causes the
curve to shift to the right as the price and demand goes hand
and hand. This allows both the price of hamon and the
quantity sold to rise.
ANSWER:
As a basic consumer, we can sustain our basic needs despite these challenges in
increased prices through proper prioritization of needs or creating an
alternative. We can do proper prioritization so that no thing will be misused and
needs will be properly allocated and saved. For example, if you can be full by
eating one egg and one cup of rice in a breakfast, then you should not go for
unnecessary foods such as chocolate drink or having 3 cups of rice. If you can
eat rice already, don’t buy a bread then as it’s just both carbohydrates-rich food.
Just choose one of it. Another way is to find alternatives for these basic
commodities. For example, in cooking, an LPG Gas and a Gas stove is a
necessity so that you can prepare your foods but it is too expensive. Now, we
would have to seek for an alternative such as using a kalan and uling which is
cheaper and isWorksheet (Additional
more accessible especiallyActivity)
to rural areas. With these challenges,
we just need to use our minds to think critically, creatively, and strategically.
 Problem Solving and Critical Thinking Analysis
Directions: Analyze this diagram below. “In the goods market, no seller
would be willing to sell for less than the equilibrium price.” State and explain
the theory related to this statement. Note: The chart is your reference for your
answer.

Please answer here

ANSWER:
In a normal scenario, this statement is true. It is relative to the law of supply
upon which suppliers are willing to produce more supplies if the price is higher
and vice versa. In this case, we assume that all variables are constant. We can
say that it is related to the law of supply because if the seller sell for lower the
equilibrium price, they would produce less and there would be less supply
market, therefore making an economic problem. This should not happen, that’s
why sellers would only sell at the equilibrium price or higher so that they’ll be
more satisfied to produce more quantity.
Now, not every time, this statement is true. It can also be false in a case to case
basis. For example, if what is being sold is a perishable goods like fruits,
vegetables and meat, the statement is considered to be false. It is due to the fact
that these goods cannot be stored for too long and can get spoiled quickly.
Then, sellers would be willing to sell these goods that are close to spoiling at a
falling price which is lower than the equilibrium price, so that they’ll at least
earn something form it.

Date Accomplished: Jan. 27, 2021 Date Submitted: Feb. 2, 2021