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?

21.60 kilos Signup and view all the answers

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

The demand curve shifts to the left or right Signup and view all the answers

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

Qd = 120 - 4P Signup and view all the answers

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

Changes in the market price of the product Signup and view all the answers

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

21.60 kilos Signup and view all the answers

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

They have an inverse relationship 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?

Quantity demanded increases Signup and view all the answers

How is market equilibrium achieved according to the provided functions?

When Qd equals Qs Signup and view all the answers

How does population affect the demand curve for a product?

An increase in population shifts the demand curve to the right Signup and view all the answers

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

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

What is the Law of Supply?

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

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

The relationship between the quantity supplied and price. Signup and view all the answers

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

Cost of production. 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?

36 pieces. Signup and view all the answers

Which of the following factors could decrease supply?

Calamities affecting production. Signup and view all the answers

What characterizes an equilibrium price in a market?

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

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

It causes the supply curve to shift rightward. Signup and view all the answers

Which statement about shifts in the supply curve is true?

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

What characterizes perfect competition in a market?

Homogeneous products and many buyers and sellers Signup and view all the answers

What does the Rent Control Law aim to achieve?

To set a ceiling on rental fees Signup and view all the answers

Which of the following best exemplifies a monopoly?

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

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

Monopolistic Competition Signup and view all the answers

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

Shortage Signup and view all the answers

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

The oil market (like OPEC) Signup and view all the answers

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

To provide mortgages to home buyers Signup and view all the answers

What defines the labor supply in the market?

All individuals aged 15 and over willing and able to work Signup and view all the answers

What was the employment rate in June 2024?

96.1% Signup and view all the answers

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

30 to 34 years Signup and view all the answers

What was the unemployment rate in June 2024?

3.9% Signup and view all the answers

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

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

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

3.2% Signup and view all the answers

What was the underemployment rate in June 2024?

12.3% Signup and view all the answers

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

116,010,975 Signup and view all the answers

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

96.8% Signup and view all the answers

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

Change in consumer preferences Signup and view all the answers

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

Qd = 120 - 4P Signup and view all the answers

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

An increase in quantity demanded at all prices 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?

The quantity demanded decreases Signup and view all the answers

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

A line that slopes downward from left to right Signup and view all the answers

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

Change in the price of sweet potatoes Signup and view all the answers

What is the equilibrium price for fresh eggs?

Php 11.00 Signup and view all the answers

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

Php 11.00 Signup and view all the answers

How is the demand function for fresh eggs represented mathematically?

Qd = 63 - 3P Signup and view all the answers

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

50 pieces Signup and view all the answers

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

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

What model represents the equilibrium function for cheddar cheese?

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

What is the relationship described by the Law of Demand?

As the price increases, the quantity demanded decreases. Signup and view all the answers

What effect does the income effect have on consumer behavior?

It alters real income and affects purchasing power. Signup and view all the answers

Which market is characterized by the trading of securities?

Financial market Signup and view all the answers

Which of the following best describes the substitution effect?

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

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

Consumers will be motivated to buy more goods. Signup and view all the answers

What type of market is characterized by workers offering services?

Labor market Signup and view all the answers

What is one characteristic of the money market?

It involves trade in short-term loans. Signup and view all the answers

How does the law of demand typically affect price elasticity?

Typically, demand is inversely elastic. 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?

21.60 kilos Signup and view all the answers

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

Qd = 120 - 4P Signup and view all the answers

What does the equilibrium price of 24.60 pesos signify?

It is the price where quantity demanded equals quantity supplied. Signup and view all the answers

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

There will be a market surplus. Signup and view all the answers

Which equation represents the supply function for sweet potatoes?

Qs = -126 + 6P Signup and view all the answers

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

23 pesos Signup and view all the answers

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

The equilibrium price increases. Signup and view all the answers

How is the equilibrium quantity determined graphically?

It is where the demand curve meets the supply curve. Signup and view all the answers

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

36 kilos Signup and view all the answers

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

Change in equilibrium price affects equilibrium quantity directly. 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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Description

This quiz explores the non-price determinants of demand, the relationship between price and quantity demanded, and how shifts in demand and supply interact. Understand concepts like the demand schedule, demand curve, and changes in quantity versus changes in demand. Perfect for students studying introductory economics.