Source: Buffalo State, The State University of New York.

Applied Economics,
M.A. Retrieve from https://economics.buffalostate.edu/applied-economics-ma

12

Quarter 1 – Module 3:
The Market: Demand,
Supply and Equilibrium
Applied Economics

1
Applied Economics - Grade 12
Quarter 1 – Module 3: The Market: Demand, Supply and Equilibrium

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Regional Director: Gilbert T. Sadsad Assistant Regional Director: Jessie L. Amin

Development
Development Team
Team of
of the
the Module
Module

Writers: Malvina Q. Capistrano

Editors: Elizabeth N. Macale, Asst. Principal / Evangeline A. Lagrimas SHS Teacher II
Reviewers: Joy G. Cabrera, EPS / Darcy Guy Y. Mañebo, EPS
Illustrator: Malvina Q. Capistrano
Layout Artist: Malvina Q. Capistrano

2
 Applied Economics - Grade 12
Quarter 1 – Module 3: The Market: Demand, Supply and Equilibrium

I. INTRODUCTION
Demand identifies the needs and wants of the consumers while the supply determines the good or
service produces by the producers. The consumers and producers/sellers interact in the market for the
exchange of goods and services at a given price. When a consumer and producer/seller do not agree
with the quantity demanded and quantity supplied respectively for the price of a product or service,
how do the demand and supply determine the market price?

II. OBJECTIVES

At the end of the lesson, you will be able to:

1. Learn the concept of market demand, the market supply, and the market equilibrium;
2. Discuss and explain the factors that affect demand and supply to the consumers and producers
respectively;
3. Analyze the effect of change in demand and supply;
4. Apply the principles of demand and supply to illustrate how prices of commodities are
determined.

III. VOCABULARY LIST

Please read the economics terminologies listed below before you proceed to the next pages to align
and guide you with the discussion of the lesson:
▪ Complementary Goods – two goods for which an increase in the price of one leads to a decrease
in the demand for the other.
▪ Demand – pertains to the quantity of a good or service that people are ready to buy at a given
price within a given period.
▪ Demand Curve – a graph of the relationship between the price of a good and the quantity
demanded.
▪ Demand Schedule – a table that shows the relationship between the price of a good and the
quantity demanded.
▪ Equilibrium – a situation in which supply and demand have been brought into balance.
▪ Equilibrium Price – the price that balances supply and demand.
▪ Equilibrium Quantity – the quantity supplied and the quantity demanded when the price has
adjusted to balance supply and demand.
▪ Law of Supply and Demand – the claim that the price of any good adjusts to bring the supply
and demand for that goods into balance.
▪ Market – refers to a place where a group of buyers and sellers of a particular good or service
interacts.
▪ Quantity Demanded – the amount of a good that buyers are willing and able to purchase.
▪ Quantity Supplied – the amount of a goods or services that sellers are willing and able to sell.

3
▪ Shortage – a situation in which quantity demanded is greater than quantity supplied.
▪ Substitute Goods – two goods for which an increase in the price of one leads to an increase in the
demand for the other,
▪ Supply – refers to how much of a product a business owner can supply to buyers and at what
price.
▪ Supply Curve – a graphical representation shows the relationship between the price of the product
sold or the factor of production and the quantity supplied per period.
▪ Surplus – a situation in which quantity supplied is greater than quantity demanded.
Source: Mankiw NG. Principles of Economics, 5th edition.
eBook. http://www.ccebook.cne

IV. PRE-TEST

TEST YOURSELF

Choose the letter of your correct answer and write it on a separate paper.
1. The quantity of goods demanded per period is inversely related to its price, other things constant.
a. demand b. law of demand c. law of supply d. supply
2. A line showing the quantities of a particular supplied at various prices during a given period, other
things constant.
a. supply b. supply curve c. supply function d. supply schedule
3. The quantity of a product demanded is NOT equal to the quantity supplied.
a. disequilibrium b. equilibrium c. shortage d. surplus
4. It shows the relationship between demand for a commodity and the factors that determine or
influence this demand.
a. demand b. demand function c. demand curve d. demand schedule
5. The government's specification with minimum or maximum current price of a particular good or
service that disadvantageous to the producer or consumer.
a. price ceiling b. price control c. price floor d. surplus

V. LEARNING ACTIVITY

Copy the diagram provided to the next page on a separate paper and plot the following hypothetical
market supply and demand information for rice:
Quantity Demanded Quantity Supplied
Price Per Kilo (In Thousand Kilo) (In Thousand Kilo) Situation
100 50 250 Surplus
80 100 200 Surplus
60 150 150 Equilibrium
40 200 100 Shortage
20 250 50 Shortage

4
After you graph the market demand and supply for rice, label your graph with the following
information:
1. demand (connect the data points with line) 4. surplus
5. supply (connect the data points with line) 5. shortage
6. equilibrium (use solid line)

Supply and Demand for Rice

120

100

80
Price Per Kilo

60

40

20

0
0 5 10 15 20 25 30
Quantity Demanded/Supplied

The slope of demand demonstrates the law of demand, and the slope of supply illustrates the law of
supply. Observe the movement of points in the slopes of demand and supply in terms of the
relationship between price and quantity and answer the following questions:
1. What is law of demand? law of supply?
(Give an emphasize in your explanation the relationship between price and quantity).
2. When prices change, how is that reflected on a given supply or demand curve?
3. Explain how market equilibrium determined.

5
 MARKET DEMAND
https://economictimes.indiatimes.com/news/ec
Demand: Report. Jan 27, 2020. Retrieve from
Source: The Economics Time/News. Budget

What Determines the Quantity an Individual

May Include Stimulants to Boost Consumer

Demands?

When you buy goods or rendered services, what factors

affect in your decision? Here are some of the answers
you might give:
1. Price
When you buy a product or render a service, your
onomy/policy

concern is whether it is expensive or inexpensive. If

the price of a particular product or service rise, you buy
less, and if the price fall, you buy more. Hence, you
might conclude that the quantity demanded is negatively related to the price. As the quantity
demanded of a product or service increases, the price falls and decreases as the price rises.
2. Income
What would happen to your family's demand for grocery, if your father gets promoted, and his
salary increases? Most likely, it would rise. It is because an increase in an individual's income,
generally, increases his/her purchasing power to demand more goods or services that one is not
able to purchase in a low income. On the other hand, an individual with low income reduces the
purchasing power that makes the demand for goods and services to decline.
3. Prices of Related Goods
When a particular price of product increases, you tend to look closely related commodities or
substitute goods. Substitute goods generally offered at a lower price, thus, makes it more attractive
to you as a buyer to buy such products, sample butter to margarine.
The complementary goods also affect the quantity demanded of an individual. These are goods
which cannot exist without the other product. For instance, the jeep cannot run without gasoline,
and your cellphone cannot function if you do not have a sim card or load.
4. Tastes and Preferences
Your buying decision-making affects your likes and dislikes about the product. Your tastes and
preferences as a consumer, frequently, decide whether you will buy or not, or how many quantities
you will buy for a product.
5. Expectation of Future Prices
Your forecast about the probability to happen in the future may affect your demand for a product
or service today. For example, you are planning to give your best friend a perfume on his birthday
next month. However, the SM Department Store announced a 50% markdown on the price of
perfume next week. If you have enough money, you may be more willing to buy the perfume
next week rather than next month.
6. Occasional or Seasonal Products
There are products which sellable for a short time during the event only are called occasional or
seasonal products. For example, during Christmas season, demand items are Christmas decors,
hams, and quezo de bola, while on Valentine’s Day, demand rises for red roses and chocolates.
However, after such events, the demand for these products go to its original level.

6
7. Population Change
Another way to determine for the quantity demanded on some type of goods and services is
through the size of a population in a certain area. This means that the quantity demanded of a good
and service is measure by the number of demands of people residing in the area. When a
population increases, the more goods and services are demanded, because of the rising population.
Inversely, a decrease in population results to decline the demand. For example, if you have four
(4) members in your family, then one (1) sack of rice is enough as your consumption for a month.
However, if you have twelve (12) members in the family, one (1) sack of rice is not enough to
sustain your need. Your family demand for one-month consumption of rice is at least three (3)
sacks.

To analyze how market work, you need to determine the market demand which is the sum of all
the individual demands for a particular good or service.

Shift in the Demand Curve

Whenever any determinant of demand changes, other than the good’s price, the demand curve shifts.
Any change that increases the quantity demanded at every price, shifts the demand curve to the right.
Similarly, any change that reduces the quantity demanded at every price, shifts the demand curve to
the left.
Demand Curve Shift to the Right (Increase)
Source: Pearl Matthews. Essential Question: What factors affect demand? Retrieved from

Demand Curve Shift to the Left (Decrease)

Demand Curve Shift to the Left (Decrease)

https://slideplayer.com/slide/13766856/

7
 Gdynia_Pomerania_Province_Northern_Poland.html
https://www.tripadvisor.com.ph/Attraction_Review-

MARKET SUPPLY
g274726-d8490699-Reviews-Market_Place-
Source: Market Place (Gdynia) Retrieved from

What Determines the Quantity an Individual

Supplies?
What determines the quantity of a product the sellers
are willing to produce and offer for sale? Here are some
of your possible answers:
1. Price
The sellers sell more products at a higher price than at
a lower price. These are because higher sales result in
higher profits. If your family has farmland and a mini-
grocery store and you are selling rice, you are more willing to sell rice at a high price because
selling it is profitable. By contrast, when the price of rice is low, you sell less rice because your
family business is less profitable.
2. Input Prices
The cost of production of rice, like the cost of seeds, equipment, and fertilizer, affects the price of
rice. Hence, when the price of one or more of these inputs rises, your store becomes less profitable;
consequently, your store supplies less rice. If input prices rise substantially, your family might
stop or sell no rice at all. Hence, the quantity supplied and the input prices of production have a
negative relationship.
3. Technology
New technology makes increases the production of a product. Using harvest automation and
autonomous tractors technology makes farms more efficient and productive. By reducing
production costs, the advance in technology raised the supply of rice in the market.
4. Future Expectation
This factor impacts sellers as much as buyers. If you foresee an increase in the price of rice, you
may decide to discontinue the current supply to take advantage of the future rise in price, thus
decreasing market supply. If you, however, expect a decline in the rate of rice, you will increase
the current quantity supplied of rice.
5. Number of Sellers
The number of sellers is another determinant to determine the quantity supplied in the market. If
you are more sellers there are in the market, the more the supply of goods and services will be
available. If more farmers plant rice instead of other crops, then the quantity supplied of rice in
the market will increase due to an increase in production, assuming that no destructive calamities
strike the country.
6. Weather Conditions
Natural disasters – typhoons, drought, and others – reduce the supply of agricultural commodities
while good weather has an opposite impact. If your farm or riceland destroys by a calamity, the
quantity supplied of rice in the market will decline.
7. Government Policy
The government also influences the market supply through policies like trade agreements, farm
subsidies, tariffs, property taxes, and conservation programs. For instance, through government
programs like the Conservation Reserve Program (CRP), your family can be paid not to plant
crops for a certain number of years. The more number of acres enrolled in CRP will reduce the

8
 supply of the commodities commonly grown in your land.

To analyze how market work, you have to determine the market supply by the sum of all of the
supplies of the sellers.

Shift in the Supply Curve

Whenever there is a change in any determinant of supply, other than the good’s price, the supply curve
shifts. Any change that raises the quantity supplied at every price shifts the supply curve to the right.
Similarly, any change that reduces the quantity supplied at every price shifts the supply curve to the
left.

Supply Curve Shift to the Right (Increase)

`
Source: Pearl Matthews. Essential Question: What factors affect demand? Retrieved from

Supply Curve Shift to the Left (Decrease)

https://slideplayer.com/slide/13766856/

9
Source: Naeem Javid Muhammad Hassani .

Equilibrium. March 27, 2018. Retrieved from

increase in Demand for Forestry Goods in Market
What is Market Equilibrium? Show the effect of the

MARKET EQUILIBRIUM
https://forestrypedia.com/what-is-market-

You learned the different factors affecting demand and supply now
you try to combine the demand and supply curve to see how to
equilibrium-show-effect_27/

determine the quantity of a good sold in a market and its price.

You will notice that the two lines have intersected across the point,
and this is called the market equilibrium. The price at which the
demand and supply curve meet is called the equilibrium price and
the quantity is called the equilibrium quantity.

At the equilibrium price, the quantity of the good that buyers are
willing and able to buy is the same as the quantity that sellers are willing and able to sell. The
equilibrium price sometimes called the market-clearing price because, at this price, everyone in the
market has been satisfied. Buyers have bought all they want to buy, and the sellers have sold all they
want to sell. (N. Gregory Mankiw)

The behavior of buyers and sellers naturally drives markets toward their equilibrium. When the market
price is above the equilibrium price, there is a surplus of the good, which causes the market price to
fall. When the market price is below the equilibrium price, there is a shortage, which causes the market
price to rise. (N. Gregory Mankiw)

Three Steps to Analyze Changes in Equilibrium

To analyze how any event influences or how the determinants of demand and supply affect the market,
you have first to draw the demand curve and the supply curve at the same graph. Then, examine how
the event affects the equilibrium price and the quantity by performing the following three (3) steps:
1. Decide whether the event shifts the supply curve or the demand curve (or both).
2. Decide which direction the curve shifts – to the right or to the left.
3. Compare the new equilibrium with the old equilibrium
(N. Gregory Mankiw)
Illustration:
Suppose that one summers the weather is very hot. How does this event affect the market for ice
cream?
To answer this question, you must draw a demand and supply curve and apply and follow the three
https://www.coursehero.com/sg/microeconomi

steps to analyze changes in equilibrium:

1. The hot weather affects the demand curve by
Source: Jadrian wooten. Shifts of

changing people’s taste for ice cream. That is, the

Equilibrium. Retrieved from

weather changes the amount of ice cream that

people want to buy at any given price. The supply
cs/shifts-of-equilibrium

curve is unchanged because the weather does not

directly affect the firms that sell ice cream.
2. Because hot weather makes people want to eat more
ice cream, the demand curve shifts to the right. The
increase in demand as the shift in the demand curve
to the right indicates that the quantity of ice cream
demanded is higher at every price.

10
3. The increase in demand raises the equilibrium price and the equilibrium quantity. In other words,
the hot weather increases the price of ice cream and the quantity of ice cream sold.

Source: N. Gregory Mankiw. Principle of Economics. E-book CCebook.

http://www.ccebook.cn

What Happens to Price and Quantity When Supply or Demand Shifts?

If you are confused with your answer, whether the demand and supply will increase, or decrease, or
no change at all, herein the table that you can use to check your answer. But, before you proceed to
use this table, you have to draw the demand and supply curve first, then apply and follow the three (3)
steps to analyze the changes in equilibrium.
The table shows the predicted outcome for any combination of shifts in the demand curve and supply
curve. In order to answer the above question for any certain situation, pick an entry in this table and
make sure you can explain to yourself why the table contains the prediction it does.
No Change An Increase A Decrease
in Supply in Supply in Supply
No Change in Demand 𝑷 𝐬𝐚𝐦𝐞 𝑷 𝐝𝐨𝐰𝐧 𝑷 𝐮𝐩
𝑸 𝐬𝐚𝐦𝐞 𝑸 𝐮𝐩 𝑸 𝐝𝐨𝐰𝐧
An increase in Demand 𝑷 𝐮𝐩 𝑷 𝐚𝐦𝐛𝐢𝐠𝐮𝐨𝐮𝐬 𝑷 𝐮𝐩
𝑸 𝐮𝐩 𝑸 𝐮𝐩 𝑸 𝐚𝐦𝐛𝐢𝐠𝐮𝐨𝐮𝐬

A Decrease in Demand 𝑷 𝐝𝐨𝐰𝐧 𝑷 𝐝𝐨𝐰𝐧 𝑷 𝐚𝐦𝐛𝐢𝐠𝐮𝐨𝐮𝐬

𝑸 𝐝𝐨𝐰𝐧 𝑸 𝐚𝐦𝐛𝐢𝐠𝐮𝐨𝐮𝐬 𝑸 𝐝𝐨𝐰𝐧

𝑷 − 𝑝𝑟𝑖𝑐𝑒 𝑸 − 𝑞𝑢𝑎𝑛𝑡𝑖𝑡𝑦
Source: N. Gregory Mankiw. Principle of Economics. Retrieved from
http://www.ccebook.cn

MARKET EQUILIBRIUM: A MATHEMATICAL APPROACH

There are three (3) ways to determine the market equilibrium: using the table/schedule, graphical
representation, and the mathematical approach. You have already learned two of these three (3)
methods from the previous discussion of this module.
You can also determine the market equilibrium by using your basic knowledge in algebra or using the
mathematical approach. To do this, you need the three (3) sets of equations as follows:
1. Demand Equation: 𝑸𝒅 = 𝒂 − 𝒃(𝑷)
2. Supply Equation: 𝑸𝒔 = 𝒄 + 𝒅(𝑷)
3. Equilibrium Equation: 𝑸𝒅 = 𝑸𝑺

𝑸𝒅 = 𝒂 − 𝒃(𝑷) 𝑸𝒅 = quantity demanded at a particular price

𝒂 = intercept of the demand curve
𝒃 = slope of the demand curve
𝑷 = price of the good at a particular time period

11
 𝑸𝒔 = 𝒄 + 𝒅(𝑷) 𝑸𝒔 = quantity supplied at a particular price
𝒂 = intercept of the supply curve
𝒃 = slope of the supply curve
𝑷 = rice of the good sold

VI. PRACTICE TASKS

Source: Kristopher May. Economic Decision-Making.
Retrieved fromhttps://slideplayer.com/slide/7901691/

PRACTICE TASK 1

Movement of Demand and Supply Curve

Indicate the effects of the given statements on the demand and supply of a good based on the following
outcomes: Write the phrase of your choice on the space provided after each demand and supply.
1. Shift to the right 2. Shift to the left 3. No Change

1. Million jobless Filipinos due to pandemic crises.

Demand for non-essential goods and services
Supply of non-essential goods and services
2. Consumers panic buying due to community quarantine lockdown
announcement.
Demand for basic commodities
Supply of basic commodities
3. Discovery of vaccine for COVID 19 during a pandemic.
Demand for vaccine
Supply of vaccine
4. New investment in the manufacturing of personal protective
equipment (PPE).
Demand for PPE
Supply of PPE
5. Increase in mortality rates due to COVID 19 pandemic.
Demand for manpower
Supply of manpower

12
https://www.locusassignments.com/solution/

PRACTICE TASK 2
unit-55-business-economics-assignment
Source: LOCUS Assignments. Unit 55
Business Economics Assignment.

Market Equilibrium

Read the information below and write your answer on a separate paper.
Retrieved from

The market for ASUZ laptop has the following demand and supply schedule:
Price Quantity Demanded Quantity Supplied
(P - Thousand) (Qd - Thousand) (Qs - Thousand)
P 25 150 50
30 125 75
35 100 100
40 75 125
50 50 150
55 25 175

Required:
1. Graph the demand and supply curve using the diagram below.
2. What are the equilibrium price and quantity in this market?
3. If the actual price in this market were above the equilibrium price, what would drive the
market toward equilibrium?
4. If the actual price in this market were below the equilibrium, what would drive the market
toward equilibrium?

ASUZ Laptop's Demand and Supply

60

50
Price (In Thousand)

40

30

20

10

0
0 25 50 75 100 125 150 175 200
Quantity (In Thousand)

13
Source: Pinclipart. Research Clip Art - 44 812k
Research 20 Jul 2016 - Research Method

https://www.pinclipart.com/maxpin/iRixRwi/
Research Icon Clipart. Retrieved from

PRACTICE TASK 3

Market Equilibrium: Mathematical Approach

Using the demand and supply function given below, complete the following demand and supply
schedule by solving the quantity demanded and quantity supplied given the price. Indicate whether
there is a surplus or shortage at the particular price level. Copy the table and write your answer on a
separate paper and show your computation.
𝑸𝒅 = 𝟔𝟓 − 𝟐𝑷 𝑸𝒔 = 𝟐 + 𝟓𝑷

Price Quantity Demanded Quantity Supplied Surplus/Shortage

20
18
15
12
10
7

2. What is the equilibrium price and quantity?

VII. POST TEST

REVIEW ECONOMIC CONCEPTS

Multiple Choice
Encircle the letter of the correct answer.
1. Which of the following is NOT a determinant of demand?
a. consumer income b. consumer expectations and tastes
c. prices of related goods d. weather conditions
2. A shift of a product’s supply curve will be caused by each of the following EXCEPT:
a. An increase in the cost of the resources used to produce the product.
b. An improvement in the technology used to produce the product.
c. An increase in consumer demand for the product.
d. A decrease in the price of other products that resources could be used to produce.
3. Given a upward-sloping supply curve, a rightward shift of the demand curve ___________.
a. Decreases both equilibrium price and quantity.
b. Increases both equilibrium price and quantity.
c. Decreases equilibrium price only.
d. Increases equilibrium quantity only.

14
4. Which of the following statement is true?
a. The supplies of inputs used affect the supply of a good.
b. The lower the price of the good, the smaller the quantity that will be offered by the supplier.
c. The lower the price of the good, the bigger the quantity that will be demanded by the buyer.
d. All the above true.
5. The demand curve is sloping down because:
a. Any increase in the cost of production will result to a higher price.
b. The lower the price, the higher the demand.
c. The lower the price, the higher the quantity that supplier are willing to sell.
d. The larger the quantity supplied, the lower the price.

APPLY ECONOMIC CONCEPTS

A. Movement of Supply and Demand Curve

Indicate the effects of the given statements on the demand and supply of a good based on the
following outcomes. Choose the number of your choice (1-3) and write your answer on the
separate paper.

1. Shift to the right 2. Shift to the left 3. No Change

1. A private firm increases employees’ salaries.

Demand for basic commodities
Supply for basic commodities
2. A firm finds a new, less expensive source of raw materials.
Demand for product X
Supply of product X
3. Switch face to face educational approach to online classes during
COVID 19 pandemic.
Demand for electronic gadgets
Supply of electronic gadgets
4. Improved technology in the manufacturing of laptops.
Demand for laptops
Supply of laptops
5. The entry of online sellers in the market for grocery shoppers.
Demand for groceries
Supply of groceries

15
 B. Market Equilibrium
Complete the table below by solving the quantity demanded, quantity supplied, market
equilibrium, surplus, and shortage. Show your solution and construct a graph of the demand and
supply on a separate paper.
𝑸𝒅 = 𝟒𝟎 − 𝟐𝑷 𝑸𝒔 = 𝟓 + 𝟑𝑷

Price Quantity Demanded Quantity Supplied Surplus/Shortage

8
7
6
5
4
3

VIII. ADDITIONAL ACTIVITIES

https://www.kissclipart.com/lightbulb-puzzle-

PROBLEM AND APPLICATION

clipart-jigsaw-puzzles-brain-teas-jutsz2/
Source: Kissclipart. Retrieved from

Suppose that, during another summer, an earthquake destroys several

ice-cream factories. How does this event affect the market for ice
cream? Draw the supply and demand curve and apply the three (3)
steps in analyzing changes in equilibrium.

Share your answer to one member of your family and check if he/she
has the same ideas as yours.

16
 X. ANSWER KEYS

I. Test Yourself
1. b 2. b 3. a 4. c 5. b

II. Learning Activity

Supply and Demand for Rice

120
Demand
100______________________________ Supply

______________
Surplus
80 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Price Per Kilo

_ ________ __
60 _________________________ Equilibrium

40 ____________ ____________
______

20 ______ Shortage Demand

___

Supply
0
0 50 100 150 200 250 300
Quantity Demanded/Supplied

1. The law of demand states that the price of a good or service varies inversely, or negatively
with the quantity demanded. It means that when price increases, the quantity demanded
decreases, and when price decreases, the quantity demanded increases.
2. The law of supply states that the price of a good or service varies directly with the quantity
supplied. It means that when price increases, the quantity supplied increases, and when the
price decreases, the quantity supplied decreases.
3. When the price of a good or service changes, there will be movement along the supply or
demand curve that indicates that the quantity demanded and supplied has changed. When
the price changes, the quantity demanded of the good or service will move in the opposite
direction. When the price changes, the quantity supplied for a good or service will move in
the same direction.
4. The market equilibrium determines when the quantity demanded is equal to the supplied of
a good or service.

III. PRACTICE TASK 1

1. Shift to the left 4. No change
Shift to the right 5.Shift to the right
2. Shift to the right 5. 6.Shift to the left
No Change 6.Shift to the left
3. Shift to the right 7.
8.
Shift to the right 9.

17
IV. PRACTICE TASK 2

1.
ASUZ Laptop's Demand and Supply
60

50

40
Price

30
Quantity Demanded
20
Quantity Supplied
10

0
0 25 50 75 100 125 150 175 200
Quantity Demanded/Supplied
(Thousand)

2. Equilibrium Price = P35 Equilibrium Quantity = 100,000 or 100 Thousand

3. Surplus
4. Shortage

V. PRACTICE TASK 3

Price Quantity Demanded Quantity Supplied Surplus/Shortage

20 25 102 Surplus
18 29 92 Surplus

15 35 77 Surplus

12 41 62 Surplus
10 45 52 Surplus

7 51 37 Shortage

2. Equilibrium Price: 9 Equilibrium Quantity: 47

VI. POST TEST

Review Economics Concept
Multiple Choice

1. D 2. c 3. b 4. d 5. b

18
Apply Economic Concepts
A. Movement of Demand and Supply Curve

1. 1 4. 3
1 1

2. 3 5. 3
1 1
1
3. 1
1

B. Market Equilibrium

Quantity Quantity
Price Demanded Supplied Surplus/Shortage
8 24 29 5
7 26 26 0
6 28 23 -5
5 30 20 -10
4 32 17 -15
3 34 14 -20

9
8
7
6
5
Price

4 Quantity Supplied

3 Quantity Demanded

2
1
0
0 3 6 9 12 15 18 21 24 27 30 33 36
Quantity Supplied/Demanded

19
 https://www.econlowdown.org/s
VII. ADDITIONAL ACTIVITY

demand?module_uid=120&sec
Source: Shifting Chocolate Bar Demand and
Changes in Equilibrium. Retrieved from
1. The earthquake affects the supply curve. By reducing the
number of sellers, the earthquake changes the amount of ice
cream that firms produce and sell at any given price. The
demand curve is unchanged because the earthquake does not
directly change the amount of ice cream households wish to
buy.

upply-and-
2. The supply curve shifts to the left because, at every price, the
total amount that firms are willing and able to sell is reduced.
3. The shift in the supply curve raises the equilibrium price. As a
result of the earthquake, the price of ice cream rises, and the quantity of ice cream sold falls.
Source: N. Gregory Mankiw. Principle of Economics. E-book CCebook.
http://www.ccebook.cn

REFERENCES:

• N. Gregory Mankiw. Principle of Economics. E-book CCebook. http://www.ccebook.cn.

• Edilberto B. Viray Jr. & Jesusa Avila-Bato. Applied Economics for SHS ABM. Mandaluyong
City. Anvil Publishing Inc. 2018.
• Rosemarie P. Dinio, PhD & George A. Villasis. Applied Economics. Quezon City. Rex
Printing Company Inc. 2017.
• CENGAGE. Applied Economics – An Introduction for SHS ABM Strand (Philippine Edition).
CENGAGE LEARNINGS

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