Demand Concepts and Determinants
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Questions and Answers

What does a shift in the demand curve indicate?

  • A change in the price of the product
  • A stable quantity demanded regardless of price
  • A change due to non-price determinants (correct)
  • A reduction in consumer income

    • Which equation best represents the demand function for sweet potatoes?

  • Qd = 100 + 4P
  • Qd = 150 - 3P
  • Qd = 120 - 4P (correct)
  • Qd = 80 + 5P

    • If the price of sweet potatoes is set at Php 25, what is the quantity demanded?

  • 40 pieces
  • 20 pieces (correct)
  • 30 pieces
  • 10 pieces

    • What is the equilibrium quantity when the equilibrium price is set at 24.60 pesos?

    <p>21.60 kilos</p> Signup and view all the answers

    What is implied when the demand for a good changes due to other factors besides its price?

    <p>The demand curve shifts to the left or right</p> Signup and view all the answers

    Which equation represents the demand function as described in the content?

    <p>Qd = 120 - 4P</p> Signup and view all the answers

    Which of the following is NOT a non-price determinant of demand?

    <p>Changes in the market price of the product</p> Signup and view all the answers

    At an equilibrium price of 24.60 pesos, what is the value of the quantity supplied?

    <p>21.60 kilos</p> Signup and view all the answers

    In a demand schedule, how is quantity demanded related to price?

    <p>They have an inverse relationship</p> Signup and view all the answers

    What happens to the quantity demanded if the price of sweet potatoes decreases from Php 30 to Php 29?

    <p>Quantity demanded increases</p> Signup and view all the answers

    How is market equilibrium achieved according to the provided functions?

    <p>When Qd equals Qs</p> Signup and view all the answers

    How does population affect the demand curve for a product?

    <p>An increase in population shifts the demand curve to the right</p> Signup and view all the answers

    Which statement correctly describes the market equilibrium schedule for sweet potatoes?

    <p>The supply price increases with an increase in quantity supplied.</p> Signup and view all the answers

    What is the Law of Supply?

    <p>An increase in price motivates sellers to supply more of a product.</p> Signup and view all the answers

    What does the supply function Qs = -126 + 6P represent?

    <p>The relationship between the quantity supplied and price.</p> Signup and view all the answers

    Which of the following is a non-price determinant that could cause a shift in the supply curve?

    <p>Cost of production.</p> Signup and view all the answers

    Given the market supply schedule for sweet potatoes, what is the quantity supplied when the price is Php 27?

    <p>36 pieces.</p> Signup and view all the answers

    Which of the following factors could decrease supply?

    <p>Calamities affecting production.</p> Signup and view all the answers

    What characterizes an equilibrium price in a market?

    <p>The price where the quantity supplied is equal to the quantity demanded.</p> Signup and view all the answers

    What effect does an increase in the number of sellers typically have on the supply curve?

    <p>It causes the supply curve to shift rightward.</p> Signup and view all the answers

    Which statement about shifts in the supply curve is true?

    <p>Supply will shift rightward with more subsidies to producers.</p> Signup and view all the answers

    What characterizes perfect competition in a market?

    <p>Homogeneous products and many buyers and sellers</p> Signup and view all the answers

    What does the Rent Control Law aim to achieve?

    <p>To set a ceiling on rental fees</p> Signup and view all the answers

    Which of the following best exemplifies a monopoly?

    <p>A single firm providing a product with no close substitutes</p> Signup and view all the answers

    In what type of market structure do firms offer differentiated products?

    <p>Monopolistic Competition</p> Signup and view all the answers

    What situation occurs when housing supply is less than existing demand?

    <p>Shortage</p> Signup and view all the answers

    Which of the following markets is most likely to be an oligopoly?

    <p>The oil market (like OPEC)</p> Signup and view all the answers

    What is the primary role of financial institutions in the housing market?

    <p>To provide mortgages to home buyers</p> Signup and view all the answers

    What defines the labor supply in the market?

    <p>All individuals aged 15 and over willing and able to work</p> Signup and view all the answers

    What was the employment rate in June 2024?

    <p>96.1%</p> Signup and view all the answers

    Which age group had the largest proportion of Overseas Filipino Workers (OFWs)?

    <p>30 to 34 years</p> Signup and view all the answers

    What was the unemployment rate in June 2024?

    <p>3.9%</p> Signup and view all the answers

    Which of the following statements about Female Overseas Filipino Workers (OFWs) is correct?

    <p>They make up a larger percentage in the age group 15 to 24 years.</p> Signup and view all the answers

    What percentage of OFWs worked overseas without a contract in 2019?

    <p>3.2%</p> Signup and view all the answers

    What was the underemployment rate in June 2024?

    <p>12.3%</p> Signup and view all the answers

    As of September 2024, what is the population of the Philippines?

    <p>116,010,975</p> Signup and view all the answers

    What percentage of the total OFWs were Overseas Contract Workers (OCWs) in 2019?

    <p>96.8%</p> Signup and view all the answers

    What best describes a change in demand as opposed to a change in quantity demanded?

    <p>Change in consumer preferences</p> Signup and view all the answers

    Which equation expresses the relationship between quantity demanded and price for sweet potatoes?

    <p>Qd = 120 - 4P</p> Signup and view all the answers

    What is indicated when there is a rightward shift in the demand curve?

    <p>An increase in quantity demanded at all prices</p> Signup and view all the answers

    In the demand schedule, what happens when the price of sweet potatoes increases from Php 25 to Php 29?

    <p>The quantity demanded decreases</p> Signup and view all the answers

    What represents the graphical representation of the demand curve for sweet potatoes?

    <p>A line that slopes downward from left to right</p> Signup and view all the answers

    Which of the following factors would NOT be considered a non-price determinant of demand?

    <p>Change in the price of sweet potatoes</p> Signup and view all the answers

    What is the equilibrium price for fresh eggs?

    <p>Php 11.00</p> Signup and view all the answers

    At what price does the quantity demanded for fresh eggs drop to 30 pieces?

    <p>Php 11.00</p> Signup and view all the answers

    How is the demand function for fresh eggs represented mathematically?

    <p>Qd = 63 - 3P</p> Signup and view all the answers

    What is the quantity supplied of fresh eggs when the price is set at Php 15.00?

    <p>50 pieces</p> Signup and view all the answers

    Which statement about the market equilibrium schedule for cheddar cheese is accurate?

    <p>The equilibrium price is found where the demand curve intersects the supply curve.</p> Signup and view all the answers

    What model represents the equilibrium function for cheddar cheese?

    <p>Qd = 350 - 2P and Qs = -380 + 3P</p> Signup and view all the answers

    What is the relationship described by the Law of Demand?

    <p>As the price increases, the quantity demanded decreases.</p> Signup and view all the answers

    What effect does the income effect have on consumer behavior?

    <p>It alters real income and affects purchasing power.</p> Signup and view all the answers

    Which market is characterized by the trading of securities?

    <p>Financial market</p> Signup and view all the answers

    Which of the following best describes the substitution effect?

    <p>Consumers switch to cheaper alternative goods when prices rise.</p> Signup and view all the answers

    In a market, what is the impact of low prices on consumer purchasing?

    <p>Consumers will be motivated to buy more goods.</p> Signup and view all the answers

    What type of market is characterized by workers offering services?

    <p>Labor market</p> Signup and view all the answers

    What is one characteristic of the money market?

    <p>It involves trade in short-term loans.</p> Signup and view all the answers

    How does the law of demand typically affect price elasticity?

    <p>Typically, demand is inversely elastic.</p> Signup and view all the answers

    What is the equilibrium quantity of sweet potatoes when the equilibrium price is determined to be 24.60 pesos?

    <p>21.60 kilos</p> Signup and view all the answers

    Which of the following equations accurately represents the demand function for sweet potatoes?

    <p>Qd = 120 - 4P</p> Signup and view all the answers

    What does the equilibrium price of 24.60 pesos signify?

    <p>It is the price where quantity demanded equals quantity supplied.</p> Signup and view all the answers

    If the price of sweet potatoes rises above 24.60 pesos, what is the expected market reaction?

    <p>There will be a market surplus.</p> Signup and view all the answers

    Which equation represents the supply function for sweet potatoes?

    <p>Qs = -126 + 6P</p> Signup and view all the answers

    At what price does the quantity supplied of sweet potatoes equal zero?

    <p>23 pesos</p> Signup and view all the answers

    What would happen if the supply curve for sweet potatoes shifts to the left?

    <p>The equilibrium price increases.</p> Signup and view all the answers

    How is the equilibrium quantity determined graphically?

    <p>It is where the demand curve meets the supply curve.</p> Signup and view all the answers

    Which value represents the quantity demanded at a price of 21 pesos according to the demand function?

    <p>36 kilos</p> Signup and view all the answers

    Which of the following best describes the relationship between equilibrium price and quantity in a competitive market?

    <p>Change in equilibrium price affects equilibrium quantity directly.</p> Signup and view all the answers

    Study Notes

    Non-Price Determinants of Demand

    • Factors that can shift the demand curve of a good, such as income, taste, expectations, prices of related goods, and population.

    Demand

    • Shows the relationship between the price of a particular good and the quantity that consumers are willing to buy.

    Demand Schedule

    • Displays the inverse relationship between price and quantity demanded.

    Market Demand Schedule for Sweet Potato

    • Shows the quantity demanded of sweet potato at different prices, with Qd = 120 – 4P being the demand function.

    Demand Curve

    • A graphical representation of the relationship between price and quantity demanded.

    Change in Quantity Demanded

    • Occurs when the quantity demanded of a good changes only due to a change in its price, resulting in a shift along the demand curve.

    Change in Demand

    • A shift in the entire demand curve, triggered by factors other than price.

    Supply

    • Refers to the quantity of goods that a seller is willing to offer for sale.

    The Law of Supply

    • States that as the price of a good increases, the quantity supplied of that good also increases.

    Non-Price Determinants of Supply

    • Factors that can shift the supply curve, such as the cost of production, technology, availability of raw materials and resources.

    Supply Function

    • Shows the relationship between the price of a good and the quantity supplied.

    Supply Schedule

    • Displays the direct relationship between price and quantity supplied.

    Market Supply Schedule for Sweet Potato

    • Shows the quantity supplied of sweet potato at different prices, with Qs = -126 + 6P being the supply function.

    Market Supply Curve

    • A graphical representation of the relationship between price and quantity supplied.

    Shifts in the Supply Curve

    • Use of technology, subsidies, increase in sellers, increased price of related products can shift the supply curve to the right (increase).
    • Calamities, decrease in sellers, lack of subsidy, lack of technology, low commodity prices can shift the supply curve to the left (decrease).

    Equilibrium

    • A state of balance where the quantity demanded equals the quantity supplied.

    Equilibrium Price

    • The price at which the quantity demanded and the quantity supplied are equal.

    Equilibrium Quantity

    • The quantity of goods that both buyers and sellers agree to buy and sell at the equilibrium price.

    Market Equilibrium

    • Occurs when the quantity demanded is equal to the quantity supplied, represented by the equation Qd = Qs.

    Market Structures

    • Different forms of market competition, including perfect competition, monopoly, oligopoly, and monopolistic competition.

    Perfect Competition

    • An ideal market with many buyers and sellers, homogeneous products, perfect resource mobility, perfect knowledge, and a market price determined by demand and supply.

    Monopoly

    • A market dominated by a single firm with no close substitutes.

    Oligopoly

    • A market dominated by a small number of interdependent firms.

    Monopolistic Competition

    • A market with differentiated products, easy entry and exit, leading to price competition.

    Labor Supply (Labor Force)

    • Refers to the portion of the population, 15 years old and over, willing and able to work.

    Employment Rate in June 2024

    • Provides data about Labor Force, Employment Rate, Underemployment Rate, and Unemployment Rate in June 2024.

    Population of the Philippines

    • Presents Philippine population census data from 2000 to 2020, showing the increasing population.

    Total Number of OFWs Estimated at 2.2 Million

    • Provides data on the number of Overseas Filipino Workers (OFWs) who worked abroad between April and September 2019, highlighting the characteristics of OFWs, including age, gender, and occupation.

    Non-Price Determinants of Demand

    • Factors that can cause an upward or downward change in the entire demand for a product, shifting the demand curve.
    • These factors include:
      • Income
      • Taste
      • Expectations of future price and income
      • Prices of related goods
      • Population

    Demand Schedule

    • A table showing the inverse relationship between price (P) and quantity demanded (Q or Qd)
    • The market demand schedule for a sweet potato demonstrates this relationship.

    Demand Function

    • A mathematical expression that expresses the relationship of quantity demanded (Qd) and price (P)
    • The formula for the demand function is: Qd = 120 – 4P
      • Qd: Quantity demanded
      • 120: Unwanted demand
      • 4P: Change in demand
      • P: Price

    Change in Quantity Demanded

    • A change in the quantity demanded of a good due to its price changing.
    • Shift along the demand curve.

    Change in Demand

    • A change in demand for a good due to other factors besides price.
    • The demand curve shifts to the left or to the right.

    Supply

    • The quantity of goods that a seller is willing to offer for sale.

    Market Types

    • Goods Market: Where consumers buy goods.
    • Labor Market: Where workers offer services and employers hire workers.
    • Financial Market: Includes the stock market where securities of corporations are traded, and other markets including:
      • Interbank market - Between banks
      • Stock Exchange - Securities bought and sold
      • Money Market - Short-term loans between banks and financial institutions
      • Bond Market - Debt securities bought and sold
      • Foreign Exchange - Currency exchange

    Demand

    • The willingness of a consumer to buy a commodity at a given price.

    Income and Substitution Effects

    • Income Effect: Change in price of a good that changes consumer’s purchasing power (ability to buy with a given income).
      • More money, more goods can be bought.
    • Substitution Effect: Change in price of a good that changes demand because of alternative consumption of substitute goods.
      • Buying cheaper goods instead of expensive ones.

    The Law of Demand

    • As price increases, the quantity demanded decreases.
    • Low prices encourage consumers to buy more.
    • High prices decrease the quantity demanded.
    • Ceteris Paribus: All other variables except the one being studied are held constant.

    Equilibrium Quantity

    • The quantity of products that both buyers and sellers agree to transact at a specific price.

    Market Equilibrium

    • Point where demand equals supply (Qd = Qs)

    Computation Practices

    • Steps to determine equilibrium price and quantity:
      • Compute the demand and supply schedules.
      • Graph the demand and supply curves.
      • Compute the equilibrium price and quantity.

    Saving and Investment

    • Saving: Setting aside a portion of current income for future use.
    • Investment: Building up capital stock for more future production and consumption.
    • Both are necessary for building the future.

    Rent

    • Payment for the use of land or buildings belonging to others.
    • Rent is the difference between the actual payment for a factor of production (land, labor, capital) and its owner’s cost.

    Minimum Wage Rates

    • The national capital region (NCR) has different minimum wage rates across different sectors.
    • Effective as of July 16, 2023.
    • The non-agriculture sector has a minimum wage of ₱610.00.
    • The agriculture sector and retail/service establishments employing 15 workers or less have a minimum wage of ₱573.00.
    • The manufacturing establishments that employ less than 10 workers have a minimum wage of ₱573.00.

    Tax

    • The lifeblood of the government.

    Philippine Peso and Foreign Currencies

    • The Philippine Peso has conversion rates to other currencies.
    • As of September 15, 2023:
      • Dollar: 56.841 pesos
      • Yen: 0.384 pesos
      • Euro: 60.572 pesos
      • Riyal: 15.615 pesos
    • Trading with other countries impacts the economy and requires foreign currency.

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