REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF EDUCATION
REGION IV-A
SAN PABLO CITY DIVISION
FELIX AMANTE SENIOR HIGH SCHOOL
SAN IGNACIO, SAN PABLO CITY

Learning Competency:

Determine the concepts of market demand, market

supply and market equilibrium
ABM_AE12-Ie-h3

How to Use the Module/Learning Packet

1. Follow carefully all the contents and instructions indicated in every page
of this module/packet.

2. Read carefully the content of this packet, if you cannot understand it at

first reading, reread and ask questions from any reliable person or
sources.

3. Do not write anything in this packet.

4. Write on your notebook the concepts about the lessons.

5. Perform all the provided activities in the packet.

Write the activities and answers in a separate sheet of papers.

6. Let your facilitator/guardian assess your answers.

7. Analyze the result of your posttest and apply what you have learned.

8. You have to return the learning packet together with your answer sheets on your
activities and posttest after each lesson or one whole learning packet.

9. It is you who are going to work and study hard to fully understand the lesson well.

10. Any doubts and questions you have in mind, kindly ask your parent/facilitator and if
in any means, the queries were not resolved, try to contact your subject teacher.
At the end of the lesson, learners are expected to:
1. determine the concepts of market demand, supply and equilibrium
2. state the laws of demand and supply
3. construct and analyze demand, supply and their curves
4. solve problems on demand, supply and equilibrium

Market Demand, Market Supply, and

Market Equilibrium
Economics helps us solve the problem on excess supply and excess
demand, and lead it to a balanced supply and demand. In our needs, we do not
want oversupply. It means wastage of income. For entrepreneurs, it is not
efficient if their stocks or supplies are greater than the actual demand. It is a
loss not revenue.
In economics, there are terms that you must learn to understand the
better market situations. A demand or the amount of good or service
consumers are willing to purchase at each price. If customers cannot pay for it,
there is no effective demand. Price is what a buyer pays for a unit of the
specific good or service. The total number of units purchased at that price is
called the quantity demanded.
Law of Supply and Demand
The law of supply and demand explains the interaction between
the sellers of a product and the buyers. It shows the relationship between the
availability of a particular product and the desire (or demand) for that product
has on its price.
The Law of Demand
The quantity supplied and lab
If all other factors remain equal, the vice versa. c) the num
higher the price of a good, the fewer Producers supply d) Ancilla
people will demand that good. more at a higher price because e) materia
selling at higher quantity at a higher price f) weather
“the higher the price, increases revenue. g) reliabil
the lower the quantity
demanded” and vice versa. The law of

The amount of a
good that
buyers
purchase at a
higher price is
fewer because
as the price of
good goes up, ―as
the opportunity com
cost of buying
the good also is
less. Consumers When
will avoid
buying a
product.

The Law of Supply

The law of supply demonstrates the

quantities that will be sold at a given
price.
The higher the price, the higher
 For example, if the price of video
game drops, the demand for games may
increase as more people want the games.

Factors Affecting Demand

a) income of buyers
b) number of potential buyers
c) preferences
d) complementary products
The demand curve is always downward
sloping due to the law of diminishing
marginal utility
 How Do Supply and Demand Create an Equilibrium Price?
Equilibrium price or market-clearing price. is the
price at which the producer can sell all the units he
wants to produce and the buyer can buy all the units he
wants.
Supply and demand are balanced, or in equilibrium.
the demand curve is downward sloping. This
is due to the law of diminishing marginal utility.
The supply curve is a vertical line; overtime, supply curve slopes upward;
the more suppliers expect to be able to charge, the more they will be willing to
produce and bring to market.
In the Equilibrium point, the two slopes will intersect. The market price is
sufficient to induce suppliers to bring to market that same quantity of goods that
consumers will be willing to pay for at that price.

REMEMBER
What Provision
​ A demand curve shows the relationship between quantity demanded and
price in a given market on a graph.
​ The law of demand states that a higher price typically leads to a lower
quantity demanded.
​ A supply curve shows the relationship between quantity supplied and
price on a graph.
​ The law of supply says that a higher price typically leads to a higher
quantity supplied.
​ The equilibrium price and equilibrium quantity occur where the supply
and demand curves cross.
​ The equilibrium occurs where the quantity demanded is equal to the
quantity supplied.
​ If the price is below the equilibrium level, then the quantity demanded
will exceed the quantity supplied.
● Excess demand or a shortage will exist. If the price is above the equilibrium
level, then the quantity supplied will exceed the quantity demanded.
ACTIVITIES
Activity 1. The Law of Demand and Supply
Directions: Analyze this problem. The following data were taken from an
invoice of Company X. The company imports gasoline from other country.
1.1) Plot or graph the data. Interpret the results.
Price Quantity Demanded
($ per gallon) (millions of gallons)
1.00 800
1.20 700
1.40 600
1.60 550
1.80 500
2.00 460
2.20 420

Table 1. Price and Quantity Demanded of Gasoline

Price

Qd
Figure 1. Price and Quantity Demanded of Gasoline
Legend: P – Price; D- Demand; Qd –Quantity Demanded
1.2 Analyze data and describe the curve.
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_____________________________________________________________________________
______________________________________________________________________.

Activity 2. Problem Solving

Directions: Analyze the problem. The following are sets of data taken from the
invoice of Company X. The company imports gasoline from other country.
2.1) Plot or graph the data.
Supply of Gasoline
Price (millions of gallons)
($ per gallon)

1.00 500
1.20 550
1.40 600
1.60 640
1.80 680
2.00 700
2.20 720

Table 2. Price and Supply of Gasoline

Qd

Figure 1. Table 2. Price and Supply of Gasoline

Legend: P – Price; S- Supply; Qd –Quantity Demanded
2.2 Analyze data and describe the curve. Interpret the results.
__________________________________________________________________________
__________________________________________________________________________
_________________________________________________________________________.
 2.3) Using the data from demand and supply,
a) Determine the equilibrium point of the demand and supply curves.
P

Qd
Figure 3. The Equilibrium Price

b) How much is the price in the equilibrium point?

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