Polytechnic University of the

Philippines College of Social

Sciences and Development
Department of Economics

MICROECONOMICS
Exercise No.2-Market Demand and
Supply Analysis

Name: Jan Maui A. Vasquez Score:/60

Course/Year and Section:BSBAMMOUMN 2-A Date : JULY 26, 2022
Professor: Ms. Maria Vicenta C. Magpantay

1. Given the demand schedule below,

PRI QUANTIT Quantity Quantity of
CE Y Supplied Shortage/Surp
DEMAND lus
ED
0 100 50 -50
shortage
5 85 60 -25 shortage
8 76 66 -10
shortage
10 70 70 -0 equilibrium
15 55 80 25 surplus
20 40 90 50 surplus

a. Compute the coefficient of determination/slope (4 points)

= 85 - 100/ 5 - 0
= -15/5
= -3
The coefficient of determination or slope is -3.

b. Derive the demand function (2 points)

Qd = 100 - 3P
Qd = 100 - 3(0) = 100 - 0 = 100
Qd = 100 - 3(5) = 100 - 15 = 85
Qd = 100 - 3(8) = 100 - 24 = 76
Qd = 100 - 3(10) = 100 - 30 = 70
Qd = 100 - 3(15) = 100 - 45 = 55
Qd = 100 - 3(20) = 100 - 60 = 40
 Price Quantity Demand

0 100

5 85

8 76

10 70

15 55

20 40

2. Given the supply function: S=50+2P

a. Determine the quantity supplied and fill up the column in the schedule
using the same market prices in the given table below. Show the
computations. (12 points)

S = 50 + 2P
S = 50 + 2(0) = 50 + 0 = 50
S = 50 + 2(5) = 50 + 10 = 60
S = 50 + 2(8) = 50 + 16 = 66
S = 50 + 2(10) = 50 + 20 = 70
S = 50 + 2(15) = 50 + 30 = 80
S = 50 + 2(20) = 50 + 40 = 90
 Slope
ΔQd/ ΔP
=60 - 50/ 5-0 = 10/5 =2
b= 2

Price Quantity demand Quantity supplied

0 100 50

5 85 60

8 76 66

10 70 70

15 55 80

20 40 90

3. Determine the market equilibrium

a. Using the derived demand function in # 1b and the given supply function in
#2, compute the equilibrium price and equilibrium quantity using a
mathematical approach. (8 points)
Qd = S
100 - 3P =50 + 2P
100 - 50 = 2P + 3P
50 = 5P
P = 10
The equilibrium price is 10.
 Qd = S
100 - 3(10) = 50 + 2(10)
100 - 30 = 50 + 2(10)
70 = 70
The equilibrium quantity is 70.
b. Based on the schedule below, highlight and label the row that
shows the market equilibrium. (2 points)

PRICE QUANTITY Quantity Quantity of

DEMANDED Supplied Shortage/Surplus
0 100 50 -50 shortage
5 85 60 -25 shortage
8 76 66 -10 shortage
10 70 70 -0 equilibrium
15 55 80 25 surplus
20 40 90 50 surplus

4. Based on the demand and supply schedule below,

a. Compute the shortage or surplus and fill up the quantity of shortage/surplus
column. Show the computations. (12 points)
Qs - Qd
50 - 100 = -50
60 - 85 = -25
66 - 76 = -10
70 -70 = 0 equilibrium price
80 - 55 = 25
90 - 40 = 50
b. When does surplus occur in the market? (5 points)
Surplus is below the equilibrium price 25 and 50

c. When does shortage occur in the market? (5 points)

Shortage is above the equilibrium price - 50 -25

5. Based on the demand and supply schedule (10 points)

a. Draw the demand and supply curves
b. Identify and label the market equilibrium point, equilibrium price and
equilibrium quantity
c. Label the area for shortage and surplus
ANSWER:
A .Demand/Supply and Shortage/Surplus Schedule

PRI QUANTIT Quantity Quantity of

CE Y Supplied Shortage/Surp
DEMAND lus
ED
0 100 50 -50
shortage
5 85 60 -25 shortage
8 76 66 -10
shortage
10 70 70 -0 equilibrium
15 55 80 25 surplus
20 40 90 50 surplus

b. Graphical presentation of demand and supply curves. Follow the rules in

graphing and label appropriately. (10 points)