ARELLANO UNIVERSITY

Juan Sumulong Campus

2600 Legarda St., Sampaloc, Manila
SENIOR HIGH SCHOOL DEPARTMENT
School Year 2020-2021

DYNAMIC LEARNING PROGRAM (DLP 2)

APPLIED ECONOMICS

NAME: ____________________________________ DATE:________________________

GRADE & SECTION:__________________________ TEACHER:_____________________

I. TOPIC: Application of Demand and Supply

II. LEARNING GOAL: The students should be able to:

a. Define what is supply and demand;
b. Illustrate and explain the law of supply and demand:
c. Discuss and explain factors affecting demand and supply

III. CONCEPTS:
DEMAND – it refers to the set of quantities buyers are willing and able to buy at various prices at a
given time and place.
DEMAND FUNCTION – is the mathematical function explaining the quantity demanded in terms of its
various determinants.
DEMAND SCHEDULE - It shows the number of good consumers is willing to buy at each market
place.
DEMAND CURVE - It is a graphical presentation of the relationship between the price and the quantity
demanded.
SAMPLE OF DEMAND FUNCTION:
Formula: Qd = a – b(P)
Given: Qd = 120 – 20P if P = 1, 2, 3, 4, and 5
Solution:

Qd1 = 120 – 20P Qd2 = 120 – 20P

= 120 – 20(1) = 120 – 20(2)
= 120 – 20 = 120 – 40
= 100 = 80

Qd3 = 120 – 20P Qd4 = 120 – 20P

= 120 – 20(3) = 120 – 20(4)
= 120 – 60 = 120 – 80
= 60 = 40

Qd5 = 120 – 20P

= 120 – 20(5)
= 120 – 100
= 20

SAMPLE OF DEMAND SCHEDULE:

Price Quantity Demand
(P) (Qd)
1 100
2 80
3 60
4 40
 ARELLANO UNIVERSITY
Juan Sumulong Campus
2600 Legarda St., Sampaloc, Manila
SENIOR HIGH SCHOOL DEPARTMENT
School Year 2020-2021

5 20

SAMPLE OF DEMAND CURVE:

LAW OF DEMAND – It affirms that, if all other aspects stay equal, the higher the price of a commodity,
the less people will demand that good.
SUPPLY - It refers to the willingness and ability of suppliers to manufacture and sell goods and
services in order to maximize profit.
SUPPLY FUNCTION - Is the mathematical function explaining the quantity supplied in terms of its
various determinants.
SUPPLY SCHEDULE - It shows the amount of good producers are willing to sell at each market place.
SUPPLY CURVE - It is a graphical presentation of the relationship between the price and the quantity
supplied.
SAMPLE OF SUPPLY FUNCTION:
Formula: Qs = -a + b(P)
Given: Qs = -20 + 30P if P = 2, 4, 6, 8 and 10
Solution:
Qs1 = -20 + 30P Qs2 = -20 + 30P
= -20 + 30(2) = -20 + 30(4)
= -20 + 60 = -20 + 120
= 40 = 100

Qs3 = -20 + 30P Qs3 = -20 + 30P

= -20 + 30(6) = -20 + 30(6)
= -20 + 180 = -20 + 180
= 160 = 160

Qs5 = -20 + 30P

= -20 + 30(10)
= -20 + 300
= 280

SAMPLE OF SUPPLY SCHEDULE:

Price Quantity Supplied
(P) (Qs)
2 40
4 100
6 160
8 220
10 280

SAMPLE OF SUPPLY CURVE:

 ARELLANO UNIVERSITY
Juan Sumulong Campus
2600 Legarda St., Sampaloc, Manila
SENIOR HIGH SCHOOL DEPARTMENT
School Year 2020-2021

LAW OF SUPPLY – is all a fundamental principle of economic theory which states that all other
variables that affect supply are held constant. An increase in price results is an increase in quantity
supplied.

DETERMINANTS OF DEMAND (FACTORS THAT INFLUENCE DEMAND):

1. Climatic / Seasonal condition

2. Income
3. Price of related goods (complementary and substitute)
4. Population / Number of buyers
5. Taste and preference of consumers
6. Price expectations

DETERMINANTS OF SUPPLY (FACTORS THAT INFLUENCE SUPPLY):

1. Production technology
2. Prices of production factors
3. Availability of raw material and other resources
4. Number of production units
5. Government policies
6. Random, natural and other factors

CHANGE IN DEMAND GRAPH: CHANGE IN SUPPLY GRAPH:

IV. ACTIVITY/EXERCISES:
Computation. Solve and illustrate the three methods used in determining the supply and demand.
 ARELLANO UNIVERSITY
Juan Sumulong Campus
2600 Legarda St., Sampaloc, Manila
SENIOR HIGH SCHOOL DEPARTMENT
School Year 2020-2021

1. Qd = 2400 - 30P
What are the values of Qd if P = 55, 65, 75, 85, and 95?
DEMAND FUNCTION DEMAND SCHEDULE

DEMAND CURVE

2. Qs = -5400 + 45P
What are the values of QS if P = 25, 45, 65, 85, and 100?
 ARELLANO UNIVERSITY
Juan Sumulong Campus
2600 Legarda St., Sampaloc, Manila
SENIOR HIGH SCHOOL DEPARTMENT
School Year 2020-2021

SUPPLY FUNCTION SUPPLY SCHEDULE

SUPPLY CURVE