RODOLFO F.

LAGURA
MARIE SHERYL FERNANDEZ
ABBYGAIL ABAY

The graph no. 1 is an example of an outward shift of a market supply curve in

where there’s a higher quantity demanded, the supply shifts out and more quantity
supplied at each price. While a change in the price of the good moves us along the
demand curve to a different quantity demanded, a change or shift in demand will cause
a different quantity demanded at each and every price. A rightward shift in demand
would increase the quantity demanded at all prices compared to the original demand
curve. The supply curve will shift if there is a change in a non-price factor, which affects
producers. An example of this is the supply for rice. Mostly of the farmers now in a
globalized economy have shifted from using the traditional form of farming into using
technology to cut cost, to maximize the time and to produce more goods. Technological
improvement like using harvesters, rotary tractors, and etc. will greatly reduce the input
cost of a product when compared with the use of manpower. Since the input cost is
reduced it will shift the supply curve outward, allowing suppliers to provide a greater
supply at the same price level.

The graph no. 2 shows the price ceilings at a surplus and shortage market level.
A price ceiling below the market price creates a shortage causing consumers to
compete vigorously for the limited supply, limited because the quantity supplied declines
with price. On the other hand, above the market equilibrium price ceilings doesn’t or has
no effect at all on the quantity supplied but it creates surplus. Surplus because the
quantity of supply increases as price increase. An example for this is the rent control.
Rent control is a common type of price ceiling that large cities like Manila, Cebu, Makati
and CDO often impose to make housing more affordable for low income tenants. Over
the short run, the supply for apartments is inelastic, since the quantity of buildings
already supplied is constant, and those being constructed will continue to be
constructed because of sunk costs.Over the long-run however, rent control decreases
the availability of apartments, since suppliers do not wish to spend money to build more
apartments when they cannot charge a profitable rent. Landlords not only do not build
any more apartments, but they also do not maintain the ones they have, not only to save
costs, but also because they do not have to worry about market demand, since there is
excessive demand for rent-controlled apartments. Hence, excess demand and limited
supply leads to a large shortage. On the other hand, mostly of the highly urbanized
cities set their rental rates above the market equilibrium especially in condos,
apartments and villas. With that being said, only few among millions of Filipinos are
capable of renting spaces like that hence it leads to a large surplus.