HOMEWORK AND DRILLS

COMPLETE NAME: NHIEL BRYAN D. BERSAMINA

SUBJECT: BASIC MICROECONOMICS
YEAR AND COURSE: BSBA-2 (FINALS)

ACTIVITY 1: Use the space below to take notes on the basic principles of demand.

Demand:

 Law of Demand: is one of the most fundamental concepts in economics. It works with
the law of supply 

 Demand Schedule: demand schedule is a table that shows the quantity demanded of a good
or service at different price levels. 

 Demand Curve: a graph showing how the demand for a commodity or service varies with
changes in its price.

ACTIVITY 2

Define Change in Demand: Explain the 6 factors that can cause a change in demand

1. Tastes and Preferences of the Consumers: ADVERTISEMENTS: ...

2. Income of the People
3. Changes in Prices of the Related Goods
4. Advertisement Expenditure
5. The Number of Consumers in the Market
6. Consumers' Expectations with Regard to Future Prices:

ACTIVITY 3

• Define Normal Goods: is a good that experiences an increase in its demand due to a rise in
consumers' income. 

• Give an example of a normal good:  Examples of normal goods include food staples, clothing,
and household appliances.

• Define Inferior Goods:  is an economic term that describes a good whose demand drops
when people's incomes rise.
• Give an example of an inferior good SUPPLY Define the terms below and follow the
instructions listed after the vocabulary.

1. Supply:  supply is the amount of a resource that firms, producers, labourers, providers of
financial assets, or other economic agents are willing and able to provide to the marketplace or
to an individual. Supply can be in produced goods, labor time, raw materials, or any other
scarce or valuable object

2. Law of Supply:  law of supply is the microeconomic law that states that, all other factors
being equal, as the price of a good or service increases, the quantity of goods or services that
suppliers offer will increase, and vice versa. The law of supply says that as the price of an item
goes up, suppliers will attempt to maximize their profits by increasing the quantity offered for
sale.

3. Supply Schedule: supply schedule is a table that shows the relationship between the price of
a good and the quantity supplied. ... The supply schedule is a table view of the relationship
between the price suppliers are willing to sell a specific quantity of a good or service.

Research on Law of Supply and answer the following prompt.

1. Differentiate between change in quantity supplied and change in supply.

 A change in quantity supplied is a movement along the supply curve in response to
a change in price. A change in supply is a shift of the entire supply curve in response
to something besides price.
2. What happens to supply when production costs increase?
 If production costs increase, the supplier will face increasing costs for each quantity
level. Holding all else the same, the supply curve would shift inward (to the left),
reflecting the increased cost of production. The supplier will supply less at each
quantity level.
3. What happens to a supply curve when a change in supply occurs?
 A change in supply leads to a shift in the supply curve, which causes an imbalance in
the market that is corrected by changing prices and demand. An increase in the
change in supply shifts the supply curve to the right, while a decrease in the change
in supply shifts the supply curve left.

4. List and describe the six factors that cause a change in supply.

a. Natural Conditions:
If rainfall is plentiful, timely, and well distributed, there will be bumper crops. On the contrary,
floods, droughts, or earthquakes and other natural calamities are bound, to affect production
adversely. This is one set of conditions which brings about a change in the supply.
b. Technical Progress:
The volume of production or supply is also influenced by progress in the technique of
production. In manufacturing industries, this is a very important factor. 

c. Change in Factor Prices:

A change in the prices of the factors of production also brings about a change in the supply of
the commodity. If the factors of production become cheap, the supply will increase, and vice
versa.

d. Transport Improvements
Improvement in the means of transport reduces the cost and increases the supply of the
product. Thus conditions of supply change.

e. Monopolies:
The monopolists may deliberately increase or decrease the supply as it suits them. Thus
exercise of monopolistic power brings about a change in supply.

4. What is elasticity of supply?

 Price elasticity of supply measures the responsiveness to the supply of a good or
service after a change in its market price.
5. What is the difference between industries that have elastic supply and those that have
inelastic supply.

 Industries that have inelastic supply are those that require a lot of capital, skilled
labor, or difficult-to-obtain resources, while industries that have elastic supply are
those that don't.