SENIOR HIGH SCHOOL Applied Economics Market Equilibrium Self-Learning Module 9 666 Quarter 3

Applied Economics Quarter 3 – Self-Learning Module 9: Market Equilibrium First Edition, 2020 Republic
Act 8293, Section 176 states that no copyright shall subsist in any work of the Government of the
Philippines. However, prior approval of the government agency or office wherein the work is created
shall be necessary for exploitation of such work for profit. Such agency or office may, among other
things, impose as a condition the payment of royalties. Borrowed materials (i.e., songs, stories, poems,
pictures, photos, brand names, trademarks, etc.) included in this module are owned by their respective
copyright holders. Every effort has been exerted to locate and seek permission to use these materials
from their respective copyright owners. The publisher and authors do not represent nor claim
ownership over them. Published by the Department of Education - Schools Division of Pasig City Printed
in the Philippines by Department of Education – Schools Division of Pasig City Development Team of the
Self-Learning Module Writer: Emmanuel B. Penetrante Editor: Dr. Edna D. Camarao Reviewers:
Content/Language: Hedelita B. Calonia Technical: Emmanuel B. Penetrante Illustrator: Name Layout
Artist: Name Management Team: Ma. Evalou Concepcion A. Agustin OIC-Schools Division
Superintendent Aurelio G. Alfonso EdD OIC-Assistant Schools Division Superintendent Victor M. Javeña
EdD Chief, School Governance and Operations Division and OIC-Chief, Curriculum Implementation
Division Education Program Supervisors Librada L. Agon EdD (EPP/TLE/TVL/TVE) Liza A. Alvarez
(Science/STEM/SSP) Bernard R. Balitao (AP/HUMSS) Joselito E. Calios (English/SPFL/GAS) Norlyn D.
Conde EdD (MAPEH/SPA/SPS/HOPE/A&D/Sports) Wilma Q. Del Rosario (LRMS/ADM) Ma. Teresita E.
Herrera EdD (Filipino/GAS/Piling Larang) Perlita M. Ignacio PhD (EsP) Dulce O. Santos PhD
(Kindergarten/MTB-MLE) Teresita P. Tagulao EdD (Mathematics/ABM) Applied Economics SENIOR HIGH
SCHOOL Market Equilibrium Quarter 3 Self-Learning Module 9 Introductory Message For the facilitator:
Welcome to the Senior High School – Applied Economics Self Learning Module on Market Equilibrium!
This Self-Learning Module was collaboratively designed, developed and reviewed by educators from the
Schools Division Office of Pasig City headed by its Officer-in-Charge Schools Division Superintendent, Ma.
Evalou Concepcion A. Agustin, in partnership with the City Government of Pasig through its mayor,
Honorable Victor Ma. Regis N. Sotto. The writers utilized the standards set by the K to 12 Curriculum
using the Most Essential Learning Competencies (MELC) in developing this instructional resource. This
learning material hopes to engage the learners in guided and independent learning activities at their
own pace and time. Further, this also aims to help learners acquire the needed 21st century skills
especially the 5 Cs, namely: Communication, Collaboration, Creativity, Critical Thinking, and Character
while taking into consideration their needs and circumstances. In addition to the material in the main
text, you will also see this box in the body of the module: As a facilitator you are expected to orient the
learners on how to use this module. You also need to keep track of the learners' progress while allowing
them to manage their own learning. Moreover, you are expected to encourage and assist the learners as
they do the tasks included in the module. Notes to the Teacher This contains helpful tips or strategies
that will help you in guiding the learners. For the learner: Welcome to the Applied Economics Self
Learning Module on Market Equilibrium! This module was designed to provide you with fun and
meaningful opportunities for guided and independent learning at your own pace and time. You will be
enabled to process the contents of the learning material while being an active learner. This module has
the following parts and corresponding icons: Expectations - This points to the set of knowledge and skills
that you will learn after completing the module. Pretest - This measures your prior knowledge about the
lesson at hand. Recap - This part of the module provides a review of concepts and skills that you already
know about a previous lesson. Lesson - This section discusses the topic in the module. Activities - This is
a set of activities that you need to perform. Wrap-Up - This section summarizes the concepts and
application of the lesson. Valuing - This part integrates a desirable moral value in the lesson. Posttest -
This measures how much you have learned from the entire module. After going through this module,
you are expected to: 1. understand the market shortage and surplus; 2. determine the market
equilibrium; and 3. explain how equilibrium price and quantity are determined. Directions: Read each
statement carefully. Choose the letter of the best answer and write it on a separate sheet of paper. 1. It
is a situation where demand is equal to supply. A. Price Stability B. Fairness and Equity C. Economic
Growth D. Market Equilibrium 2. It is a situation where demand exceeds supply. A. Sufficient B. Scarce C.
Shortage D. Surplus 3. It is a situation where supply is greater than demand. A. Shortage B. Surplus C.
Scarce D. Sufficient 4. In a graph, all points below the equilibrium point are: A. Surplus B. Shortage C.
Sufficient D. Scarce EXPECTATIONS PRETEST 5. In a graph, all points above the equilibrium point are: A.
Surplus B. Shortage C. Scarce D. Sufficient Directions: Explain how non-price determinants affect supply
shifts. Give at least one reason for the shift and write it in the table below. Non-Price Determinants
Increase in Supply Decrease in Supply 1. Technology 2. Cost of Production 3. Weather Conditions 4.
Number of Sellers 5. Prices of Alternative Goods Produced RECAP Consumers and producers react
differently to price changes. Higher prices tend to reduce demand while encouraging supply, and lower
prices increase demand while discouraging supply. Remember that we have discussed the economic
goals and one of these is price stability – anchored in economic stability. Economic theory suggests that
in a free market there will be a single price that brings demand and supply into balance. This module will
give you an understanding of how consumers are willing to purchase and how producers are willing to
supply at the agreed price and quantity. Market Equilibrium It is a situation in which demand and supply
are equal. Equilibrium in a market happens when the price balances the amount that consumers want to
buy and the amount that sellers want to sell. Table 1. Market Demand and Supply for Sandwiches
Situation Price per unit (Php) Quantity demanded (Units) Quantity supplied (Units) A 10 100 20 B 15 80
40 C 20 60 60 D 25 40 80 E 30 20 100 LESSON Figure 1 shows the combined demand curve and the
supply curve for sandwiches. The price at which the quantity demanded equals the quantity supplied is
called the equilibrium price. It is the price agreed by consumers and sellers which in the graph is at ₱20.
The quantity bought and sold at equilibrium price is called the equilibrium quantity. It is the number of
units that consumers are willing to buy and sellers are willing to sell their products, which in the graph is
60 sandwiches. What will happen if the consumers and sellers do not agree given the price and
quantity? There will be a disequilibrium that would result in shortage and surplus. Market Shortage The
market shortage is one of the causes of disequilibrium. It is a situation in which the quantity demanded
is greater than the quantity supplied. This means that there is an excess in demand. Let say, the price of
a sandwich is ₱15. The sellers are willing to sell 40 sandwiches at ₱15, referring to point A. Meanwhile,
consumers are willing to buy 80 sandwiches at ₱15, referring to point B. It is seen that there are few
sellers want to sell at a lower price while there are many consumers who want to purchase at a lower
price. This will result in a shortage. There is a shortage of 40 units (Qs-Qd: 40-80, a negative sign implies
a shortage). Graphically, a shortage occurs at any price below the equilibrium point. Market Surplus The
market surplus is another cause of disequilibrium. It is a situation in which the quantity supplied is
greater than quantity demanded. This means that there is an excess in supply. Let say, the price of the
sandwich increases to ₱25. The sellers are willing to produce more sandwiches, 80 units at point B. At a
higher price of ₱25, consumers plan to buy less at 40 units of sandwiches. At ₱25, sellers are willing to
produce more while consumers are likely to buy less, hence it will result in surplus. There is a surplus of
40 units (Qs-Qd: 80-40, a positive sign implies surplus). Graphically, a surplus occurs at any price above
the equilibrium point. Effects of Changes in Demand and Supply Some factors affect the shifts of the
demand and supply curves as we have mentioned in the previous lessons. The shifts of either demand or
supply curve will have a response to a change in price and quantity. With this shifting, new equilibrium
price and quantity are formed. 1. Change in Demand with No Change in Supply An increase in demand,
for example, an increase in the number of buyers, from D1 to D2 raises the equilibrium price from ₱20
to ₱25 and the equilibrium quantity from 60 to 80 units. A decrease in demand, for example, a decrease
in the number of buyers, from D1 to D3 lowers the equilibrium price from ₱20 to ₱15 and the
equilibrium quantity from 60 to 40 units. 2. Change in Supply with No Change in Demand An increase in
supply, for example, improvement of technology, from S1 to S3 lowers the equilibrium price from ₱20 to
₱15 and raises the equilibrium quantity from 60 to 80 units. A decrease in supply, for example, the
number of sellers are less, from S1 to S3 raises the equilibrium price from ₱20 to ₱25 and lowers the
equilibrium quantity from 40 to 60 units. 3. Increase in both Demand and Supply The increase in
demand and supply result in an increase in equilibrium quantity. The effect on the equilibrium price is
uncertain. An increase in demand raises the equilibrium price and an increase in supply lowers the
equilibrium price. In figure 8, the equilibrium price falls because the change of supply is greater than the
change in demand. However, if the change in demand is greater, the equilibrium price will increase. The
decrease in both demand and supply curve result in a decrease in equilibrium quantity. The effect on the
equilibrium price depends on the degree of the changes in demand and supply. In this case, demand
shift is greater than the supply shift, therefore equilibrium price decreases. However, if the supply shifts
greater than demand, the equilibrium price will increase. Activity: Market Condition Directions: Supply
the information needed in the appropriate columns. A. Compute for the number of units B. Identify the
market if it is shortage, surplus, or equilibrium. Table 2. Market Demand and Supply of Product EBP
Situation Qs Price (Php) Qd Excess in Demand/Excess in Supply (Units) Market Condition A 21 150 97 B
46 175 84 C 71 200 71 D 96 225 58 E 121 250 45 To summarize what you have learned in the lesson,
answer the following questions: 1. What is a market shortage? 2. What is a market surplus? 3. What is
market equilibrium? 4. How to determine equilibrium price and quantity? ACTIVITIES WRAP-UP
VALUING Reflect on this! "Live a life that is well balanced; don't do things in excess." - Daniel Smith
Directions: Read each statement carefully. Write T if the statement is correct, otherwise write F.
____________1. A decrease in supply shifts the supply curve to the left, which raises the price but
reduces output. ____________2. An increase in supply shifts the supply curve to the right, which
reduces the price and increases output. ____________3. An excess in demand results to surplus.
____________4. A decrease in demand shifts the demand curve to the left and reduces price and
output. ____________5. An excess in supply results to shortage. POSTTEST References Carnaje, Gideon
P. Applied Economics. Vibal Group Inc., Quezon City, 2019. "Inspirational Words of Wisdom." 57 Balance
Quotes. Accessed July 17, 2020. https://www.wow4u.com/balancequotes/. "Market Equilibrium."
Economics Online. January 25, 2020. Accessed July 17,
2020.https://www.economicsonline.co.uk/Competitive_markets/Market_eq uilibrium.html. POSTTEST:
1. T 2. T 3. F 4. T 5. F KEY TO CORRECTION PRETEST D 1. C 2. B 3. B 4. A 5. ACTIVITY 1: 1. 76 - SHORTAGE
SHORTAGE – 2. 38 EQUILIBRIUM – 3. 0 SURPLUS – 4. 38 SURPLUS – 5. 76