Learning Module

Program BSMA Topic: Demand Schedule and Demand

: curve
Course: Managerial Economics Instructor Mr. Usop M. Kasan
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Code ACCT01 Module 2 Week #: 3-4 # of 8
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I. Preliminaries
Introduction to
the Module
Objective DISCUSSION OF DEMAND SCHEDULE AND DEMAND CURVE.

Section Topics Learning Outcomes Assessment/ Modality

Evaluation

. At the end of the period, the students

Section 1:
should be able to:
Demand schedule and
demand curve
a. Law of demand . On line, thru
b. Assumptions and Assignment canvas
limitations of law of a. explain the Law of Seat work
demand demand; Quiz LMS
c. Determinants of b. identify the assumptions Self-
demand and limitations of law of assessment Face to
d. Demand Graph demand; Instrument Face
c. learn the determinants of
. demand if
d. calculate the demand permissible
.
graph .

II. Instructions
Keywords and concepts
 Demand
Demand Schedule
Demand Curve
Law of Demand
Assumptions and Limitations of Law of Demand
Pillars of the Law of Demand
Graph

Content Lecture/ Discussion

Demand Schedule and Demand Curve

On such a graph, the vertical axis denotes the price, while the horizontal axis denotes
the quantity demanded. A demand curve slopes downward, from left to right.

 Demand Schedule:
-A list showing the quantity of a good that consumers would choose to purchase at different
prices, with all other variables held constant

 Demand Curve:
-graphically shows the relationship between the price of a good and the quantity demanded ,
holding constant all other variables that influence demand.

Graphic presentation depicting the relationship between the price of a certain commodity and
the quantity of that commodity that is demanded at that price. 

Classification of Demand curve

a. Individual demand curve – a demand schedule showing how individual or the whole market
reacts to changes in prices of a commodity or services.

b. Market demand is a curve hat sum up all individual consumers in a market.

Law of Demand

 Fundamental characteristic of demand:

“All else equal, as the price falls, the quantity demanded rises, and as price rises, the quantity
demanded falls.”

Assumptions and Limitations of the Law of Demand

 Assumptions
 The basic assumptions of the Law of Demand

Income constant
The income of the individual directly affects the quantity demanded that’s why it should remain
constant while studying the law of demand.If the income of an individual increase it directly
positively affect the quantity which leads to shifting in quantity demanded.
 no change in tastes, fashion and habits
If the preferences and tastes, fashion and habit of the consumer vary that will directly affect the
demand for the product.it is also assumed that the fashion of a particular product does not
change.

price of related (substitute)goods remains unchanged

the price substitute does not change during its study. Therefore, the price of substitutes should
remain the same.

no future expectations

In case of the future expectations of rising in the price level or shortage leads to the storage, and
suddenly the prices increases but people continue to buy products. Therefore, the law of
demand does not hold.

no change in weather and population

population size of the sample should remain the same when studying the law of demand.
Sample means the area of study it may be province, city, municipality, barangay or the smallest
unit; the family. It also considers the weather condition.

no market knowledge

Hence, consumers buy the particular product at a higher price, the law of demand does not hold.

Sometimes consumers have no knowledge of the particular product and even buy it at higher
rates. In this case,
All of the above-mentioned assumptions are important for the implementation of the law of
demand in any market.
The assumptions of the law of demand sometimes known as pillars of the law of demand.
The assumptions of the law of demand is also known as pillars of the law of demand .

Limitations
When things neglected or not supported by the law of demand is known as limitations of law of
demand. Some assumptions became limitations when they are rejected. For example, we take
constant income of the consumer as assumption of the law of demand but when it varies it
become limitation of law of demand.

Very high-priced goods

Very low-priced goods
Ignorance of the consumer
necessities

Determinants of Demand

 1. Price of the good

 2. Price of related goods [substitutes and complements]
 3. The size of household income
 4. Taste and fashion
 5. Expectation
 6. The distribution of income among households
 7. Number of Buyers

Reasons for Downward Sloping of the Demand Curve

 1. Marginal utility effect (Customer effect)

 2. Income effect
 3. Substitution effect

DEMAND SCHEDULE DEMAND CURVE

The law of diminishing the marginal utility effect

This law suggests that as more of a product is consumed the marginal (additional) benefit to the
consumer falls, Hence, consumers will demand more goods when prices are less. This is why the
demand curve slopes downwards.

Income effect
According to this principle, the real income of people increases when the prices of commodities
reduce. And assume that money income is fixed, the income effect suggests that, as the price of
a good falls, real income – that is, what consumers can buy with their money income – rises and
consumers increase their demand.

***1
Conversely, a rise in price will reduce real income and force consumers to cut back on their
demand.

Substitution effect

In addition, as the price of one good falls, it becomes relatively less expensive. Meanwhile,
consumers often classify various commodities as substitutes. For example, many consumers may
substitute coffee and tea with each other for various reasons. When the price of galunggong (fish)
rises, consumers may switch to buying chicken more as it will become relatively cheaper.

Economists refer to this as the substitution effect. Thus, if the price of chicken reduces, its demand
will increase and the demand curve will be downward sloping. Hence, assuming other alternative
products stay at the same price, at lower prices the good appears cheaper, and consumers will
switch from the expensive alternative to the relatively cheaper one.

***1
The Graph

A graph is a picture use to present words, and data particularly the connection between two or
more quantities in an organize manner to make data easier. Another purpose of a graph is to
present data that are too numerous or complicated to be described adequately in the text and in
less space.
 III. Viable and vibrant Activities

Description of the Learning Activities

Prepare a Graph for a particular product or services .Example rice, beauty salon etc…)
Prepare at least three (3) products or services.

IV. Opportunity to reflect and articulate students’ acquired knowledge.

Purpose of the activity

Application and discussion of Graph.

For the Students

1. Share diverse perspectives
2 Pool knowledge and skills
3. Hold one another (and be held) accountable.
4. Develop stronger communication skills.

Evaluations Criteria
 Rubrics
Points Scoring criteria
40- 50 The students answer the question correctly. (correctly and complete)
26- 39 The student does not use proper data from lecture notes to answer the question. (partially correct)
11- 25 The student does not use any data from lecture notes to answer the question. (incorrect answer)
0 - 10 The student does not know how to answer the question.

Summary and Reflection

[This section required student to fill up a learning journal]

V. Textbooks and other References

Baye and Prince . Managerial Economics & Business Strategy.Mc Graw Hill Education. 2017
9th edition

1. https://www.economicsonline.co.uk/Competitive_markets/Demand_curves.html

2. http://www.beingeconomist.com/assumptions-and-limitations-of-the-law-of-demand/

3. https://simple.wikipedia.org/wiki/Graph

4. https://www.thebalance.com/what-is-demand-definition-explanation-effect-3305708

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