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MODULE 2 – ECON 221

BASIC ANALYSIS OF DEMAND AND SUPPLY

In this module, you will be introduced to the most used words in economics. The
discussion will start with the concepts of demand, its law, determinants, and how
these factors affect price and quantity. The concepts of supply including the law,
factors, shifts, and movements will also be discussed. Understanding the concepts
of demand and supply is essential in the study of economics. It also provides
answers to many economic questions.

Learning Outcomes: at the end of this module, you will be able to:
1. describe demand and supply and explain its changes that affect
decisions of both producers and consumers;
2. illustrate the behavior of consumers and producers or suppliers as
affected by changes in the non-price determinants of demand and
supply; and
3. apply the law of demand and supply in various economic situations.

Learning Activity 2.1

ELICIT: Encircle the letter of the correct answer.

1. The main factor of the behavior of people in which the law of demand applies is the ______________
of the commodity being demanded.
a. need b. quantity c. price d. want

2. The behavior of suppliers or producers to make products available for sale refers to
a. Supply b. supply schedule c. quantity supplied d. supply curve

3. It pertains to the willingness and ability of people to buy goods and services at given prices
a. Demand curve b. demand schedule c. quantity demand d. demand

4. When the government subsidy during the pandemic will be equally distributed to all Filipinos
regardless of the economic status, then commodities will
a. decrease in demand, supply will also decrease
b. increase in demand. supply will also increase
c. decrease in demand, supply will increase
d. increase in demand, supply will decrease

5. The African Swine Fever will __________ of the hog production.

a. decrease the supply, increase the demand
b. increase the supply, increase the demand
c. decrease the supply, decrease the demand
d. increase the demand, decrease the demand
 MODULE 2 – Basic Analysis of Demand and Supply 5

Learning Activity 2.2

ENGAGE AND EXPLORE: Read the article entitled “Demand and Supply Dynamics in East Asia during
the COVID-19 Recession” Share your short reflection on the effects of pandemic and the status of
Philippine economy as presented in the article (a soft copy of the pdf file of article is saved in your
flash drive)

Learning Activity 2.3

EXPLAIN. Watch the pre-recorded video on the discussion of the topic.

Learning Activity 2.4

ELABORATE: On the presented determinants of demand and supply, choose two factors (one for
demand, and one for supply) that you can relate to and give examples based on your own or family’s
experience. In general, why do consumers react to the changes? Give a short but concise answer.

On demand

On supply

Southern Christian College Econ 221 – Basic Microeconomics

 MODULE 2 – Basic Analysis of Demand and Supply 6

Learning Activity 2.5

EVALUATE: Analyze each situation below and state what happen to the Philippine market demand
and supply curves under the following conditions (write either INCREASE, DECREASE, SAME)

1. Electricity-run cars are introduced and used in the country.

On demand On supply

2. The oil fields in Iraq, a major supplier of the country, are burned
On demand On supply

3. OPEC decides to decrease the price of oil.

On demand On supply

4. A substitute for oil is discovered by Filipino inventors.

On demand On supply

5. An increase in the price of the dollar causes oil to be more expensive in the country.
On demand On supply

6. Wearing of face mask and face shield is mandatory.

On demand On supply

7. In flexible learning, stable internet connection is significant.

On demand On supply

8. Materials will be provided for modular learning; students will no longer use school supplies.
On demand On supply

Big Ideas…
✓ Demand is a schedule or curve representing the willingness of buyers in a specific period
to buy a particular product or service in the market at a given price.
✓ The law of demand states that as the price increases, demand will decrease. As the price
decreases, demand will increase ceteris paribus.
✓ Supply is a schedule or curve showing the amounts of a product that producers are
willing to offer in the market at each possible price in a specific time.
✓ The law of supply states that ceteris paribus as the price rises, producers are willing to
sell more than the price is low.
✓ Non-price determinants of both demand and supply will cause shifts in the
demand/supply curve.
✓ The equilibrium point where price and quantity of both demand and supply are equal
indicates that there is no excess or shortage of supply
✓ Floor price and price ceiling are price control strategies of the government.

Southern Christian College Econ 221 – Basic Microeconomics

 MODULE 2 – Basic Analysis of Demand and Supply 7

REFERENCES:
1. Avila-Bato, Malveda, Marcelo, Viray (2011). Micro Economics Simplified. National Bookstore
2. Azarcon, et al. (2008). Principle of Economics (A Modular Approach). Valencia Educational
Supply
3. Microeconomics (2012)Mc Graw Hill
4. Pagoso, Dinio, Villasis (2008). Principles of Microeconomics. Rex Bookstore
5. https://research.stlouisfed.org/publications/economic-synopses/2020/05/20/is-the-covid-
19-pandemic-a-supply-or-a-demand-
shock#:~:text=For%20this%20reason%2C%20most%20economists,and%20services%2C%20
at%20given%20prices.&text=People%20avoiding%20restaurants%20for%20fear,example%2
0of%20a%20demand%20shock.
6. https://www.economicsonline.co.uk/Competitive_markets/Market_equilibrium.html

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Freedom space…
Feel free to write here your evaluation, suggestion/s on how we can improve your learning.

Bible Verse for Self-Reflection

James 1:12
Blessed is the man who remains steadfast under trial, for when he has
stood the test he will receive the crown of life, which God has promised to
those who love him.

Southern Christian College Econ 221 – Basic Microeconomics