Economics: Demand and Non-Price Determinants

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Questions and Answers

What is the equilibrium quantity based on the given demand and supply functions?

21.60 kilos (correct)

120 kilos

54 kilos

24.60 kilos

What is the equilibrium price when the demand and supply functions are set equal?

21.60 pesos

24.60 pesos (correct)

27.00 pesos

30.00 pesos

Which of the following represents the market equilibrium condition?

Qd = Qs (correct)

Qd < Qs

Qd - Qs = 10

Qd > Qs

How would you represent the demand function from the data provided?

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

What is the value of quantity supplied when the price is 25 pesos?

24 kilos Signup and view all the answers

What happens to the quantity supplied when the price of a good increases?

It increases. Signup and view all the answers

Which factor does NOT contribute to shifts in the supply curve?

Changes in consumer demand. Signup and view all the answers

What is the supply function equation provided for quantity supplied?

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

What would be the quantity supplied (Qs) when the price (P) is set at 25?

24 pieces. Signup and view all the answers

Which situation would lead to a leftward shift in the supply curve?

Decrease in the number of sellers. Signup and view all the answers

What is meant by equilibrium in a market?

Where demand is equal to supply. Signup and view all the answers

If a calamity occurs, which effect would it most likely have on the supply curve?

It would cause the supply curve to shift to the left. Signup and view all the answers

How is the supply schedule best described?

It lists prices and the corresponding quantity supplied. Signup and view all the answers

What is a demand schedule?

A table showing the inverse relationship between price and quantity demanded Signup and view all the answers

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

Price of the product Signup and view all the answers

What does the demand function Qd = 120 - 4P represent?

The relationship between quantity demanded and price Signup and view all the answers

In the given example, at a price of 29.00 Php, what is the quantity demanded of sweet potatoes?

4 pieces Signup and view all the answers

What does a shift of the demand curve to the right indicate?

An increase in demand for the product Signup and view all the answers

What is illustrated by the demand curve?

The graphical relationship between price and quantity demanded Signup and view all the answers

What is indicated by a reduction in quantity demanded along the demand curve?

A decline in the product's demand Signup and view all the answers

How do changes in related goods' prices affect demand?

They can affect demand for both substitutes and complements Signup and view all the answers

What is the primary cause of the rising prices of real estate and construction materials?

Excess demand compared to supply Signup and view all the answers

Which market structure is characterized by many buyers and sellers with no significant impact on market price?

Perfect Competition Signup and view all the answers

What type of government intervention is a Rent Control Law?

Mandatory ceiling on rental fees Signup and view all the answers

Which of the following best describes a monopoly?

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

What defines an oligopoly in a market structure?

A small number of firms with strategic interactions Signup and view all the answers

In which market structure do firms sell differentiated products, making entry and exit relatively easy?

Monopolistic Competition Signup and view all the answers

What does labor supply refer to in economic terms?

Individuals 15 years and older willing to work Signup and view all the answers

Which of the following is NOT a characteristic of perfect competition?

Many firms have control over prices Signup and view all the answers

What was the employment rate in June 2024?

96.1% Signup and view all the answers

What percentage of Overseas Filipino Workers (OFWs) worked overseas without a contract in 2019?

3.2% Signup and view all the answers

Which age group comprised the largest proportion of Overseas Filipino Workers?

30 to 34 years Signup and view all the answers

What was the unemployment rate in 2023?

4.3% 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 estimated current population of the Philippines?

116,010,975 Signup and view all the answers

What percentage of female OFWs were in the age group 25 to 34 years?

46.9% Signup and view all the answers

What was the labor force participation rate in 2022?

64.7% Signup and view all the answers

Study Notes

Non-Price Determinants of Demand

Income, Taste, Expectations of future price and income, Prices of related goods, Population can cause an upward or downward change in the entire demand for a product.
This change is referred to as a shift of the demand curve.

Demand Schedule

A table that shows the inverse relationship between price (P) and quantity demanded (Q or Qd)

Demand Function

A mathematical expression that expresses the relationship of quantity demanded (Qd) and price (P).
Demand Function is Qd = 120 – 4P
- Qd is the quantity demanded
- UD (120) is unwanted demand
- 4P is the change in the demand
- P is the price

Demand Curve

A graphical representation of the relationship between price (P) and quantity demanded (Q or Qd).

Change in Quantity Demanded

Demand for a commodity changes due to changes in its price.
This is a shift along the demand curve.
If the price goes from $50 and a quantity of 100, to $20 and a quantity of 200, this demonstrates a change in quantity demanded.

Change in Demand

When the demand for a commodity changes due to other factors, such as income, population, taste and preferences, and price of related goods.
This causes the demand curve to shift to the left or to the right.
If the price remains the same, say $50, but the quantity demanded changes from 100 to 200, this indicates a shift in demand.

Supply

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

The Law of Supply

As the price increases, the quantity supplied of that product also increases.
This means as the price increases, the seller is willing to offer more of the good for sale as they see an opportunity to increase their income.
The high price is a motivation for the seller to offer more.

Non-Price Determinants of Supply

Cost of production, Technology, Availability of raw materials and resources can cause an upward or downward change in the entire supply of the product.
This is referred to as a shift of the supply curve.

Supply Function

A mathematical expression that expresses the relationship of quantity supplied (Qs) and price (P)
This is represented by: Qs = -126+6P
- Qs is the quantity supplied
- US (-126) is unwanted supply
- 6P is the change in the supply
- P is the price

Supply Schedule

A table showing the direct relationship between price and quantity supplied.

Supply Curve

A graphical representation of the relationship between price (P) and quantity supplied (Qs).

Shifts in the Supply Curve

Use of technology, Subsidy on the expenditures of producers, Increase in the number of sellers, and Increase in the price of related product can increase supply.
Calamities, Decrease in the number of sellers, Lack of subsidy, Lack of technology, and Low prices of commodities can decrease supply.

Equilibrium

A state of balance when demand is equal to supply.
This means that the quantity that sellers are willing to sell is also the quantity that buyers are willing to buy for a price.
It is an implicit agreement between how much buyers and sellers are willing to transact.

Equilibrium Price

The price at which demand and supply are equal.

Equilibrium Quantity

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

Market Equilibrium

Qd = Qs

Computation Practices

Compute for the Demand and the Supply Schedule.
Graph the demand and the supply curve.
Compute for the equilibrium price and equilibrium quantity.

Market Structures

Competition is rivalry among various sellers in the market.

Perfect Competition

Implies an ideal situation for buyers and sellers.
There are so many buyers and sellers that each has a negligible impact on market price.
Homogeneous product is sold by sellers.
Perfect mobility of resources.
There is perfect knowledge of economic agents of market conditions.
Market price and quantity of output are determined exclusively by forces of demand and supply.

Imperfect Competition

Monopoly exists when a single firm that sells in that market has no close substitutes.
Oligopoly is a market dominated by a small number of strategically interacting firms.
Monopolistic Competition is where products are differentiated and entry and exit are easy.
Government regulation is often necessary in imperfect markets to ensure fair competition.

Application of Demand and Supply to Philippine Economic Problems

Labor supply (Labor force) refers to the portion of the population who are 15 years old and over, and who are willing and able to work.
This includes those who are actively seeking work but have not found work, and those who are employed.
It does not include housewives/househusbands, full time students, those who are physically or mentally disabled, or those who do not wish to work.

Overseas Filipino Workers (OFWs) & Statistics

In 2019, the estimated number of OFWs was 2.2 million.
Overseas Contract Workers (OCWs), or those with existing work contracts, made up 96.8% of the total OFWs during that period.
The remaining 3.2% worked overseas without a contract.
The proportion of female OFWs was higher than male OFWs, at 56% and 44% respectively.
22.6% of all OFWs were in the age group 30-34 years.
20.7% were in the age group 25-29 years.
Female OFWs were younger than male OFWs.
7% of female OFWs were in the age group 15-24 years, and 46.9% were in the age group 25-34 years.
In the same age groups, male OFWs were 5.4% and 38.6% respectively.
There were more male OFWs (38.1%) than female OFWs (27%) in the age group 40 and over.
Approximately 39.6% of OFWs worked in elementary occupations.
Around 18% worked as service and sales workers.

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Description

This quiz explores the key concepts of demand in economics, focusing on non-price determinants, demand schedules, functions, and curves. Test your understanding of how income, taste, and related goods influence consumer behavior and shifts in the demand curve.