MARKET

SYSTEM
GROUP 1
Demand, Supply and Elasticity of Clean Water in the
Philippines
According to an article created by Vice News, there are 55 people who
die in the Philippines every day 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 it would be normal not to think of this
because we normally do not notice it. However, we need to. 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 facilities.” Also,
according to the PIS by 2050 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
too much demand for the supply of water.
A shortage is when there is an excess demand for the quantity supplied. While
surplus is excess in supply.

For example, if there are 10 bottles of water and there are 20 students who
want drinking these, then there will be only 10 students whose demands are
met while the others will not be able to be given anything.

There is shortage in the supply. If producers make too many bottles of water
and consumers cannot by them want to buy them, there will be surplus.

We have learned that 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
 EQUILIBRIUM CHARACTERISTICS

Equilibrium is a point of balance or a point Quantity demanded and quantities

of rest. It is also called supplied are equal.
“market-clearing price”.

Equilibrium price is the price at The economic forces are balanced

which the producer can sell all the and in the absence of external
influences, the (equilibrium) values
units he wants to produce and the
of economic variables will not
buyer can buy all the units he wants change.

Quantity demanded and The amount of goods or services

quantities sought by buyers is equal to the
supplied are equal. amount of goods or services
produced by sellers.
Price System in a Market Economy: Its Characteristics

The prices of goods that we encounter everyday to the

things we buy plays a crucial role in determining an
efficient distribution of resources in a market system.
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.
Price acts as a signal for shortages and surpluses 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 producers can make what they want and consumers are free to
purchase what they want. This means that customers live in a market
economy. When prices are high, supply increases as many firms join
the market (Judge, S. 2020).

Let’s say the units of cellular phones. The numbers of suppliers have
increased because of high prices of the cellular phones. When
smartphones were new in the market, there were fewer producers and
prices were high. The high prices attracted the producers to join the
market (Judge, S. 2020).
In shortage, quantity is less than the demand; it causes prices to go
up due to scarcity Example of which is the shortage in masks and
ethyl alcohol in the market. There is shortage in the supply, thus,
price tends to go up or tends to go higher (Judge, S. 2020).
THE LAW OF SUPPLY AND DEMAND
The law of supply and demand explains
the interaction between the sellers of a
product and the buyers. It shows the
relationship between the availability of a
particular product and the desire (or demand)
for that product has on its price.
 THE LAW OF DEMAND
It is the desire of a consumer to purchase goods or
services and willingness to pay a at for that product or
services at a given price. If all other factors remain equal, the
higher the price of a good, the fewer people will demand that
good. “the higher the price, the lower the quantity demanded”
and vice versa.
The demand curve is always downward sloping due to
the law of diminishing marginal utility.
 THE LAW OF SUPPLY
The law of supply demonstrates the quantities that
will be sold at a given price. The higher the price, the
higher the quantity supplied and vice versa.
The law of supply says … “as the price of a
product increases, companies will produce more of the
Product”. When graphing the supply vs. the price, the
slope rises.
 How Do Supply and Demand
Create an Equilibrium Price?
The law of supply demonstrates the quantities that
will be sold at a given price. The higher the price, the
higher the quantity supplied and vice versa.
The law of supply says … “as the price of a
product increases, companies will produce more of the
Product”. When graphing the supply vs. the price, the
slope rises.
 How Do Supply and Demand
Create an Equilibrium Price?
Equilibrium price is the price at which a producer can sell all the units he wants to
produce and a buyer can buy all the unit he wants.
Supply and demand are balanced, or in equilibrium
The demand curve is downward sloping. This is due to the law of diminishing marginal
utility.
The supply curve is a vertical line; overtime, supply curve slopes upward; the more
supplier expect to charge higher, the more they will be willing to produce and bring
products to market.
In the Equilibrium point, the two slopes will intersect. The market price is sufficient to
induce suppliers to bring to market that same quantity of goods that consumers will be
willing to pay for that price.
MEMBERS
 CAMANGEG, LANCE
 SELGA, VIEN ANTHONY
 VILLOLA, ALWYN
 BARUT, AYEZZA
 DAQUIL, APHRIL
 TOLENTINO, JOANA