Economics Supply Concepts Quiz
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Questions and Answers

What is the equilibrium quantity when the demand function is Qd=120-4P and the supply function is Qs=-126+6P?

  • 0 kilos
  • 21.60 kilos (correct)
  • 24.60 kilos
  • 30 kilos

    • Which equation represents the relationship between quantity demanded and price in the context provided?

  • Qd=120-4P (correct)
  • Qd=-120+4P
  • Qd=120+4P
  • Qd=126-6P

    • What is the equilibrium price derived from the demand and supply functions?

  • 20.00 pesos
  • 29.00 pesos
  • 21.00 pesos
  • 24.60 pesos (correct)

    • At what price does the quantity supplied become zero for sweet potatoes?

    <p>30.00 pesos</p> Signup and view all the answers

    Based on the Market Equilibrium Schedule for Sweet Potato, what quantity is supplied when the price is Php 23.00?

    <p>12 kilos</p> Signup and view all the answers

    What does the Law of Supply state?

    <p>As prices increase, the quantity supplied also increases.</p> Signup and view all the answers

    Which of the following is a non-price determinant that can shift the supply curve?

    <p>Technology advancements</p> Signup and view all the answers

    What is represented by the unwanted supply in the supply function Qs = -126 + 6P?

    <p>The baseline quantity supplied when price is zero</p> Signup and view all the answers

    In the supply schedule for sweet potatoes, what quantity is supplied when the price is 25 Php?

    <p>24 pieces</p> Signup and view all the answers

    Which factor could cause a downward shift in the supply curve?

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

    What does equilibrium refer to in a market context?

    <p>Where demand equals supply</p> Signup and view all the answers

    When calculating quantity supplied using the formula Qs = -126 + 6P, what is the quantity supplied at a price of 29 Php?

    <p>48 pieces</p> Signup and view all the answers

    Which of the following is NOT a reason for the supply curve to shift?

    <p>Increase in consumer income</p> Signup and view all the answers

    What type of market structure is characterized by many buyers and sellers where each has a negligible impact on market price?

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

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

    <p>Market power held by one seller</p> Signup and view all the answers

    What economic situation describes a market where a single firm sells a product with no close substitutes?

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

    Which market structure is typically characterized by strategic interaction among a small number of firms?

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

    The Rent Control Law is an example of what type of economic intervention?

    <p>Price ceiling</p> Signup and view all the answers

    Which term describes the portion of the population that includes individuals aged 15 and older who are willing and able to work?

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

    In which market structure do products tend to be differentiated, allowing firms to have some degree of market power?

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

    Which of the following best describes the concept of 'imperfect competition'?

    <p>Market situations where firms have some control over pricing</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

    What was the employment rate in June 2024?

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

    What percentage of Overseas Filipino Workers (OFWs) were estimated to work without contracts?

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

    Which age group comprised the largest percentage of OFWs?

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

    What was the labor force participation percentage in 2022?

    <p>64.7%</p> Signup and view all the answers

    In which year did the underemployment rate first drop below 13%?

    <p>2023</p> Signup and view all the answers

    What is the proportion of female OFWs compared to male OFWs?

    <p>56% female, 44% male</p> Signup and view all the answers

    What percentage of female OFWs fell within the age group 25 to 34 years?

    <p>46.9%</p> Signup and view all the answers

    What percentage of OFWs worked as plant and machine operators and assemblers?

    <p>12.2%</p> Signup and view all the answers

    Which foreign currency has the highest conversion rate to the Philippine Peso as of Sep. 15, 2023?

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

    What is the new minimum wage for non-agriculture workers in the National Capital Region effective July 16, 2023?

    <p>₱610.00</p> Signup and view all the answers

    What is the primary purpose of savings?

    <p>To set aside money for possible future use</p> Signup and view all the answers

    How is tax related to government operations?

    <p>It is the foundation of government funding</p> Signup and view all the answers

    What does rental payment specifically refer to in economic terms?

    <p>The positive difference between actual payment and value</p> Signup and view all the answers

    What percentage of OFWs worked as technicians and associate professionals?

    <p>8.7%</p> Signup and view all the answers

    Which group of workers had the lowest representation among OFWs?

    <p>Craft and related trade workers</p> Signup and view all the answers

    What effect describes the change in demand due to a price change affecting consumer purchasing power?

    <p>Income effect</p> Signup and view all the answers

    Which market type is characterized primarily by the buying and selling of consumer goods?

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

    What happens to the quantity demanded as the price of a product increases, according to the Law of Demand?

    <p>It decreases</p> Signup and view all the answers

    Which market involves the trading of short-term loans between banks and other financial institutions?

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

    What does the substitution effect lead consumers to do when faced with price changes?

    <p>Opt for cheaper alternative goods</p> Signup and view all the answers

    What concept refers to the assumption that all related variables except those being studied are held constant?

    <p>Ceteris paribus</p> Signup and view all the answers

    What characterizes perfect competition in a market?

    <p>Homogeneous products and perfect knowledge among agents</p> Signup and view all the answers

    What does monopolistic competition allow firms to do?

    <p>Differentiate their products while easily entering and exiting the market</p> Signup and view all the answers

    What is a primary consequence of the Rent Control Law?

    <p>Reduces housing supply by limiting rental fees</p> Signup and view all the answers

    Which market structure is characterized by a small number of firms interacting strategically?

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

    How does perfect knowledge among economic agents affect market prices?

    <p>It enables prices and quantities to adjust based solely on demand and supply.</p> Signup and view all the answers

    What is a defining feature of a monopoly market structure?

    <p>Single firm dominates the market with no close substitutes.</p> Signup and view all the answers

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

    <p>It increases in proportion to price.</p> Signup and view all the answers

    Which of the following factors can lead to an upward shift in the supply curve?

    <p>Increase in technology efficiency.</p> Signup and view all the answers

    What does the supply function Qs = -126 + 6P indicate when P equals 30?

    <p>There is an unwanted supply of 54 pieces.</p> Signup and view all the answers

    Which non-price determinant can negatively impact supply by causing it to shift downward?

    <p>Natural disasters.</p> Signup and view all the answers

    Which parameter best defines the equilibrium price in a market?

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

    What does a decrease in the number of sellers do to the supply curve?

    <p>It shifts the supply curve to the left.</p> Signup and view all the answers

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

    <p>The quantity supplied at zero price.</p> Signup and view all the answers

    How is the market supply schedule for sweet potatoes structured?

    <p>By listing varying prices connected to different quantities supplied.</p> Signup and view all the answers

    What is the equilibrium price derived from the provided equations for Fresh Eggs?

    <p>11 Php</p> Signup and view all the answers

    From the Market Demand Schedule for Fresh Egg, what quantity is demanded at a price of 13 Php?

    <p>24 pieces</p> Signup and view all the answers

    What is the quantity supplied at a price of 15 Php for Fresh Eggs?

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

    At which price does the quantity supplied become 0 for Fresh Eggs?

    <p>5 Php</p> Signup and view all the answers

    Using the equations provided, what is the calculated equilibrium quantity for Cheddar Cheese?

    <p>58 units</p> Signup and view all the answers

    What is the price at which the quantity demanded of Cheddar Cheese equals 40 units?

    <p>160 Php</p> Signup and view all the answers

    Which factor is NOT a cause for a shift in the supply curve for Fresh Eggs?

    <p>Consumer preferences</p> Signup and view all the answers

    What does the equation Qd = 63 - 3P signify in the context of Fresh Eggs?

    <p>Quantity demanded as a function of price</p> Signup and view all the answers

    What percentage of households own homes based on the provided population and housing data?

    <p>57.3%</p> Signup and view all the answers

    Study Notes

    The Law of Supply

    • As the price of a product increases, its quantity supplied also increases. 
    • Sellers are motivated to offer more products when the price is high, as it allows them to increase their income.

    Non-Price Determinants of Supply

    • Cost of production: The cost of producing goods affects supply. Higher costs lead to a decrease in supply, and lower costs increase supply.
    • Technology: Advancements in technology often make production more efficient, leading to an increase in supply.
    • Availability of raw materials and resources: Insufficient raw materials or resources can limit supply.

    Supply Function

    • A supply function is a mathematical expression that describes the relationship between the quantity supplied (Qs) and the price (P) of a product.
    • The function Qs = -126 + 6P represents an example of this relationship.

    Supply Schedule

    • A supply schedule presents a table showing the direct link between price and quantity supplied. 

    Market Supply Schedule for Sweet Potato (Example)

    • The supply function Qs = -126 + 6P is used to determine the quantity supplied for different prices. 
    • When price increases, the quantity supplied also increases:
      • At a price of 30.00 Php, the quantity supplied is 54.
      • At a price of 29.00 Php, the quantity supplied is 48.
      • And so on until the price reaches 21.00 Php, where the quantity supplied is 0.

    Shifts in the Supply Curve

    • Factors that increase supply (Shift to the right):

      • Use of technology
      • Government subsidies for producers
      • An increase in the number of sellers
      • An increase in the price of a related product (e.g., if the price of a substitute product goes up, suppliers might shift production to the substitute product)

    • Factors that decrease supply (Shift to the left):

      • Calamities (natural disasters, etc.)
      • A decrease in the number of sellers
      • Lack of government subsidies
      • Lack of technology
      • Low prices of commodities

    Market Equilibrium

    • Equilibrium occurs when demand equals supply. This means the quantity sellers are willing to sell is the same quantity buyers are willing to buy at a specific price.
    • The equilibrium price is the point where demand and supply are equal.
    • The equilibrium quantity is the amount of product that both buyers and sellers agree to transact at the equilibrium price.

    Market Equilibrium Schedule (Example)

    • The equilibrium price and quantity are determined by finding the price where the quantity demanded (Qd) equals the quantity supplied (Qs).
    • For example, using the supply function Qs = -126 + 6P and a hypothetical demand function Qd = 120 - 4P, we can find the equilibrium price and quantity through calculations.

    Equilibrium Price and Quantity (Example)

    • Using the demand and supply functions (Qd = 120 - 4P and Qs = -126 + 6P), the equilibrium price is calculated to be 24.60 Php.
    • The equilibrium quantity is also 21.60 kilos, meaning both buyers and sellers agree to transact 21.60 kilos of sweet potatoes at a price of 24.60 Php.

    Housing Market Example

    • The housing sector in the Philippines often faces issues of supply and demand.
    • Due to increasing prices of real estate and construction materials, the supply of housing remains inadequate compared to demand.
    • This creates an "excess" of demand.
    • Rent control laws, often implemented as government intervention, attempt to regulate rental fees by setting a maximum limit.

    Market Structures

    • Competition: The rivalry among sellers in the market.

      • Perfect Competition: An ideal situation where:
        • There are many buyers and sellers, with each having little impact on the market price.
        • All sellers offer homogeneous products.
        • Resources are perfectly mobile.
        • All market participants have perfect knowledge of market conditions.
        • The market price and quantity are determined solely by demand and supply forces.

    • Imperfect Competition: Situations where perfect competition criteria are not met.

      • Monopoly: A market dominated by a single firm with no close substitutes. Examples include Meralco (electricity distributor in Greater Metro Manila) and NAPOCOR (government-produced electricity).
      • Oligopoly: A market where a small number of firms control a significant share of the market. Example: Oil firms (OPEC).
      • Monopolistic Competition: A market where products are differentiated, and entry and exit for firms are relatively easy. Examples include car manufacturers like Toyota, Honda, Mercedes Benz, and fast food chains.

    Labor Supply (Labor Force)

    • The labor force encompasses individuals 15 years old or older who are willing and able to work. 
    • This includes those actively seeking work but haven't found it (unemployed) and those who are working (employed).
    • Excluded from the labor force are housewives or househusbands, full-time students, the physically or mentally disabled, and individuals who choose not to work. 

    Employment Rate (June 2024, Philippines)

    • The Philippines' labor force participation rate was 64.4% in June 2024. 
    • The employment rate was at 96.1% at that time.
    • The unemployment rate was 3.9%.
    • Underemployment, which refers to workers who are employed but underutilized (e.g., working less hours or in jobs below their skill level), was 12.3%.

    Overseas Filipino Workers

    • In 2019, the number of Overseas Filipino Workers (OFWs) working abroad for any period between April and September was estimated at 2.2 million.
    • The majority (96.8%) were considered Overseas Contract Workers (OCWs) with existing contracts.
    • Female OFWs comprised a larger proportion (56%) than male OFWs (44%).
    • The largest age group of OFWs was 30-34 years old.

    Philippine Peso

    • As of September 15, 2023, the Philippine Peso exchange rates for some foreign currencies were:
      • US Dollar: 56.841
      • Japanese Yen: 0.384
      • Euro: 60.572
      • Saudi Riyal: 15.615

    Economics Concepts

    • Savings: The process of setting aside a portion of current income for future use.
    • Investment: Increasing the capital stock for future production and consumption.
    • Rent: Payment for the use of land or buildings owned by someone else.
    • Minimum Wage Rates (Philippines, July 2023):
      • The National Capital Region (NCR) had a minimum wage of ₱610.00 for non-agriculture sectors and ₱573.00 for certain industries employing fewer workers.

    Tax

    • It is considered the lifeblood of the government. 

    Market Defined

    • Buyers and sellers interact in a market to engage in trading or exchange.

    Types of Markets

    • Goods Market: the most common market where consumers purchase goods.
    • Labor Market: workers offer their services and seek jobs, and employers look for workers to hire.
    • Financial Market: includes the stock market where corporations' securities are traded.
      • Examples within the Financial Market:
        • Interbank: operations between banks.
        • Stock exchange: buying and selling of securities.
        • Money market: short-term loans between banks and financial institutions.
        • Bond market: buying and selling of debt securities.
        • Foreign exchange market: exchanging one currency for another at prevailing rates.

    Demand

    • Demand represents a consumer's willingness to purchase a good at a specific price.

    Income Effect

    • A change in price influences consumer's real income (purchasing power).
    • Increase in real income from a price decrease (purchasing power increases) encourages buying more goods.

    Substitution Effect

    • Change in price leads to a change in demand due to seeking alternatives (substitute goods).
    • Consumers may switch to cheaper alternatives when prices rise.

    The Law of Demand

    • As price increases, the quantity demanded for that good decreases.
    • Ceteris Paribus (all other related variables remain constant for analysis).

    The Law of Supply

    • As price increases, the quantity supplied of that good also increases.
    • This motivates sellers to offer more for sale at higher prices.

    Non-Price Determinants of Supply (Shifting the Supply Curve)

    • Factors that move the entire supply curve upward or downward:
      • Cost of production
      • Technology advancements
      • Availability of raw materials and resources
      • Calamities
      • Subsidies
      • Number of sellers

    Supply Function

    • A mathematical equation that expresses how quantity supplied (Qs) relates to price (P).

    Supply Function Example

    • Qs = -126 + 6P
      • Qs = Quantity Supplied
      • -126 = Unwanted Supply
      • 6P = Change in supply due to price variation
      • P = Price

    Supply Schedule

    • A table illustrating the direct relationship between price and quantity supplied.

    Market Supply Schedule Example (Sweet Potato)

    • Qs = -126 + 6P
    • Point | P (Php) | Q (Kilo)
    • A | 30.00 | 54
    • B | 29.00 | 48
    • C | 27.00 | 36
    • D | 25.00 | 24
    • E | 23.00 | 12
    • F | 21.00 | 0

    Market Supply Curve Graphical Representation

    • Shows the relationship between price (P) and quantity supplied (Qs) on a graph.

    Factors Shifting the Supply Curve

    • Factors that shift the supply curve can either increase or decrease the overall supply of a product.
    • Factors increasing supply:
      • Technology improvements
      • Government subsidies
      • Increase in the number of sellers
      • Increase in the price of related products
    • Factors decreasing supply:
      • Calamities
      • Decrease in the number of sellers
      • Absence of subsidies
      • Lack of technology advancement
      • Low prices of commodities

    Equilibrium

    • A state of balance where demand and supply are equal.
    • Quantity sellers are willing to sell is the same quantity buyers are willing to buy at a certain price.
    • Equilibrium price: the price at which demand and supply are equal.
    • Market Demand Schedule Example (Fresh Egg)
      • Qd (Piece) | P (Php) | Qs (Piece)
      • 48 | 5.00 | 0
      • 39 | 8.00 | 15
      • 33 | 10.00 | 25
      • 30 | 11.00 | 30
      • 24 | 13.00 | 40
      • 18 | 15.00 | 50
      • Qd = 63 - 3P (Demand function)
      • Qs = -25 + 5P (Supply function)

    Market Supply Curve Example (Fresh Egg)

    • Graphical representation of the relationship between price (P) and quantity supplied (Qs).

    Equilibrium Point Calculation

    • Set demand and supply equations equal to each other to find Equilibrium price (P) and quantity (Q):
      • Qd = Qs
      • 63 - 3P = -25 + 5P
      • P = 11 (Equilibrium price)
      • Q = 30 (Equilibrium quantity)

    Market Supply Curve Example (Fresh Milk)

    • Graphical representation of the relationship between price (P) and quantity supplied (Qs) showing equilibrium price and quantity.

    Market Equilibrium Schedule Example (Cheddar Cheese)

    • Qd = 350 - 2P (Demand Function)
    • Qs = -380 + 3P (Supply Function)
    • Qd | P (PHP) | Qs
    • 70 | 140 | 40
    • 60 | 145 | 55
    • 50 | 150 | 70
    • 46 | 152 | 76
    • 40 | 155 | 85
    • 30 | 160 | 100

    Market Equilibrium Point Calculations (Cheddar Cheese)

    • Set both the demand and supply equations equal to one another and solve for P and Q.
    • P = 146 (Equilibrium price)
    • Q = 58 (Equilibrium quantity)

    Housing Market in the Philippines

    • Data about households and homeownership in the Philippines.
    • Total Households: 26,374,653
    • Homeownership:
      • Owned house: 57.3%
      • Owned house, rented lot: 3.9%
      • Owned house on rent-free lot (with owner consent): 18.6%
      • Owned house on rent-free lot (without owner consent): 2.1%
      • Rent house and lot: 10.8%
      • Rent-free housing unit (with or without owner consent): 7.3%
    • Housing affordability challenges: Rising real estate and construction material prices lead to limited affordability.
    • Housing shortage: Existing demand outpaces housing supplies.

    Rent Control Law

    • A government intervention regulating mandatory ceilings on rental fees.

    Competitive Market Structures

    • Competition: rivalry among sellers

    Market Structures

    • 1. Perfect Competition: An ideal situation for both buyers and sellers.
      • Numerous buyers and sellers, each with minimal impact on market price.
      • Identical (homogeneous) products sold by sellers.
      • Perfect mobility of resources.
      • Perfect knowledge of market conditions by all participants.
      • Market price and output quantity determined solely by supply and demand forces.

    Market Structures

    • 2. Imperfect Competition: Deviating from the ideal of perfect competition.
      • Monopoly: Single firm with no close substitutes in the market.
        • Ex.: Meralco (electricity distributor), NAPOCOR (government-produced electricity).
        • Requires stronger government regulations.
      • Oligopoly: Market dominated by a few strategically interacting firms.
        • Ex.: Oil companies (OPEC).
      • Monopolistic Competition: Differentiated products (with variations) and easy entry/exit for firms.
        • Ex.: Car manufactures (Toyota, Honda, Mercedes Benz), fast food franchises.

    Applying Demand and Supply to Economic Issues in the Philippines

    • Labor Supply (Labor Force): Portion of the population (15 years or older) willing and able to work, including those actively seeking employment.
    • OFWs (Overseas Filipino Workers): A significant contributor to the Philippine economy.
      • Key occupations: Plant and machine operators, assemblers, technicians, associate professionals, professionals, and craft workers.
    • Philippine Peso and Foreign Currency Exchange: Important for international trade.
      • Exchange rates impact the economy.

    Economic Terms

    • Savings: Setting aside a portion of income for future use.
    • Investment: Building capital stocks for increased future production and consumption.
    • Rent: Payment for using land or buildings owned by others.
    • Daily Minimum Wage Rates: Government-set minimum wages for different sectors and regions.
    • Taxation: The lifeblood of the government, providing revenue for public services.

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