Activity 1:

1. When do you have a surplus in the supply of product?

- when the quantity supply is greater than the demand of the product. It also
causes the prices to go down.

2. When do you have a shortage in supply of product?

- When the demand is higher than the supply of the product.

3. Using the chart above, kindly describe the point where there is a:

a. Surplus

- when the point is above the equilibrium price wherein the quantity supplied is
greater than the quantity demanded.

b. Shortage

- when the point is below the equilibrium price wherein the quantity supplied is
less than the quantity demanded.

c. Equilibrium in Price

- when the quantity supplied is equal to the quantity demanded.

4. What is Surplus, Shortage and Equilibrium Price? Define the terms.

a. Surplus

- the quantity supply of a product is greater than it's demand and it causes the
price to go down. The amount of producers wants to sell is greater than the amount of
what the consumers wants to buy.

b. Shortage
 - the quantity supply of a product is less than it's quantity demand and it causes
the price to go up. The amount of the producers wants to sell is less than the amount of
what the consumers wants to buy

c. Equilibrium Price

- the price when quantity supplied is equal to the quantity demanded. The
producer can sell all the units he wants to produce, and the buyer can buy all the units
he wants.