Demand Concepts and Determinants

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.

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.