TO MY

CLASS
Applied
Economics
MRS. EIZA R. ADDURU
Subject Teacher
 Direction: Tell
TRUE if the
statement is
correct and
FALSE if
1. The equilibrium point
incorrect. is the level
where the demand and supply curves
intersect.  TRUE
2. If the price is above the equilibrium
level, the quantity demanded is greater
than the quantity supplied.
 TRUE
 3. If the price is below the equilibrium
point, the quantity demanded is lesser
than the quantitysupplied.
FALSE
4. The law of demand applies during
online sales of computers when
consumers rush to buy products at
 TRUE
30% discounts.
5. If the price is below the equilibrium
level, then the quantity demanded will
exceed the quantity supplied.
 TRUE
Implications of Pricing
in Making Economic
Decisions
Determine the implications of market
pricing in making economic decisions; and
Value the implications of market pricing in
decision making.
Wh
at’s
Kno
w?
I Graph Analysis:
Please analyze the
graph and answer
the question
below.
 1. When do you have a surplus in the
supply of product?
 Quantity supplied is greater than
quantity demanded.

2. When do you have a shortage in

the supply of product?
 Quantity demanded is greater
than quantity supply.
 3. Using the chart above, kindly describe
the point where there is a
a. Surplus Above the equilibrium
____________________________
Below
b. Shortagepoint the equilibrium
___________________________
c. point Surplusin& Shortage
Equilibrium price
___________________Meet
 Market Pricing on Making
Economic Decisions
According to an article created by
Vice News, there are 55 people who
die in the Philippines everyday
because of the lack of clean water. As
one can see clean water is greatly needed
by all people. As a Student who is lucky
to be given all the necessities needed in
life would be normal not to think of this
because we normally do not notice it.
 According to Katrina Arianne Ebora,
who works for UNICEF’s water,
Sanitation and Hygiene Program in the
Philippines stated that “Over 30 million
people in the Philippines do not have
access to improved sanitation
Also, according to the PIS by 2050
facilities”.
the population of the areas with poverty
in Manila will reach over 9 million. With
the rising population of the Philippines
there will be a problem with the economy
of clean water because there will be much
 The Marketing Price System
A shortage is where there is an
excess demand for the quantity supplied.
While surplus is excess in supply.
Example:

10 Bottles of Water – 20
Students
There is Shortage in the
supply
The Marketing Price System
Example:

20 Bottles of Water – 10
Students

There is Surplus in the

supply
 Price System
in a Market Economy
DEMAND is the willingness of the
consumers to buy goods and
services.
In economics, the willingness to
buy goods and services should be
accompanied by the ability to buy, also
called the “Purchasing Power” This is
referred to as an effective demand
 EQUILIBRUIM
Equilibrium is a point of
balance or a point of rest. It is
also called “Market-clearing
price”.
Equilibrium price is the price
at which the producer can sell
all the units he wants to
produce and the buyer can buy
all the units he wants.
Quantity demanded and
quantities supplied are equal.
CHARACTERISTICS
The supply and demand are balance
in equilibrium.
The economic forces are balanced
and in the absence of external
influences, the (equilibrium) values
of economic variables will not
change.
The amount of goods and services
sought by buyers is equal to the
amount of goods or services
produced by sellers.
 Price System in a Market
Economy: Its Characteristics
The prices will help us to
make every day economic
decisions about our needs and
desires.
They are the indications of the
acceptance of a product; the more
popular the product, the higher
the price that can be charged.
 Prices are decided by
interactions between the
producers and the consumers.

Price acts as a signal for

shortages and surplus which
help firms and consumers
respond to changing market
conditions.
 If a good is in shortage – price will
tend to rise. Rising prices discourage
demand and encourage firms to try and
increase supply.
 If a good is in surplus – price will
tend to fall. Falling price encourage
people to buy and cause firms to try and
cut back on supply.
 Prices help to redistribute
resources from goods with little
demand to goods and services.
 The chart shows a
Surplus – the quantity is
greater than the demand.

When quantity is
greater than demand it
causes prices to go
down.
 In shortage, quantity
is less than the demand; it
causes prices to go up
due to scarcity.

SURPLUS

SHORTAGE