Quarter 1 Learning Areas APPLIED ECONOMICS

WEEK 3 Grade GAS-12

Name: _________________________________________ Date: __________________

Teacher: __ Score: _________________

I. LESSON TITLE Market Demand, Market Supply and Market Equilibrium

II. MELCs Analyze market demand, market supply and market equilibrium
III. OBJECTIVE/S  Determine the concepts of market demand, supply and equilibrium
 State the laws of demand and supply
 Construct and analyze demand, supply and their curves
 Solve problems on demand, supply and equilibrium

Activity 1

Direction. Analyze the question carefully. Encircle the letter of the correct answer.

1. A local grocery store orders 200 cases of Pepsi each week and sells them at a price of P240 per case. At
the end of the first week, they have only sold 160 cases. What economic situation is the grocery store
facing and what will have to happen to price for equilibrium to be attained?
a. surplus; price will rise.
b. surplus; price will fall.
c. shortage; price will rise.
d. shortage; price will fall.
e. nothing since the market is in equilibrium.

2. Which of the following can lead to an increase in the supply for good X?
a. a decrease in the number of sellers of good X.
b. an increase in the price of inputs used to make good X.
c. an increase in consumers' income, assuming good X is normal.
d. an improvement in technology used in production of good X.
e. none of the above

3. An increase in the price of electricity will:

a. increase the demand for kerosene heaters.
b. increase the demand for light bulbs.
c. increase the demand for stereos.
d. increase the demand for TVs.

4. Which of the following events will cause an increase in the market demand for Red Horse (a brand of
beer)?
a. A decrease in the price of Red Horse.
b. An increase in the price of Soju (another brand of beer).
c. An increase in the price of Planters peanuts (a complementary good).
d. An increase in income if Red Horse is an inferior good.
e. None of the above will cause an increase in demand.
 Activity 2

Direction. Answer the problem below.

1. The following table gives the daily supply and demand for soft drinks at a sporting event:

Price Quality Demanded Quality Supplied

10.50 500 5000
10.00 1000 3000
9.50 1500 1500
9.00 2000 900
8.50 2500 300

a. What is the equilibrium price of soft drinks? What makes you think so?

b. If the organizers of the sporting event decide to set the price at 10.00, how many soft drinks will be sold?

c. Construct the graph and analyze demand, supply and their curves.
2. Suppose the quantity supplied S and quantity demanded D of T-shirts at a concert are
S ( p )=−200+50 p and D ( p )=1000−25 p .

a. Graph these two functions.

b. Find the equilibrium price and equilibrium quantity.