BARO, Kathleen Casey D.

ABM 12 – TM/HRM
Applied Economics

1. What is the Law of Demand?

The law of demand implies that other factors being constant, the price and quantity
demand of any item and service is inversely correlated with one another. The law of
demand is a fundamental economic concept that argues consumers demand fewer
goods or products when a good's price increases.
https://economictimes.indiatimes.com/definition/law-of-demand
https://www.investopedia.com/terms/l/lawofdemand.asp

2. What are factors affecting demand?

One of the factors’ affecting demand is the price of its products. The cost of
products has the most significant influence on a product's demand. Higher prices reduce
demand, whereas lower prices increase demand due to consumer satisfaction. If people
cannot afford your goods, there will be less demand for the seller. The quantity of
customers in the market is another factor that influences demand. Demand is
established by how many people buy a particular product. As a result, the bigger the
number of customers accessible, the greater the demand.
https://nielseniq.com/global/en/insights/analysis/2022/7-factors-that-influence-the-
demand-of-consumer-goods/#niq-tab-4

3. Give an example of the Law of Demand in real life. Explain. You may need to research
here.  

A notable example of the law of demand is when consumers buy products on sale, such
as the 12.12. deals on Shopee and Lazada, consumers will acquire a large number of
goods, given the limited availability. Another example is when students are obsessed over a
particular K-pop group. Students will most likely buy or wait for the merchandise to go on
sale before purchasing. Nowadays, the fuel price is so high that many people opt to walk or
ride their bicycles to work; this is one example of the law of demand. When the price is
higher, people will purchase fewer goods and vice versa.
4. What is the Law of Supply?

The law of supply illustrates the behavior of producers in response to changes in the
cost of products and services. When the price of an item increases, the producer
increases supply to make a profit from the higher pricing. The law of supply asserts that
a price increase will stimulate producers to provide a larger proportion to the economy.
https://www.investopedia.com/terms/l/lawofsupply.asp
https://economictimes.indiatimes.com/definition/law-of-supply

5. What are factors affecting supply?

One of the elements that impacts supply is the price. Price is the most important
factor affecting a product's supply. According to the law of supply, when the price of a
product increases, so does its supply, and vice versa. Another factor is transportation;
the supply chain relies on effective asset management and logistics to move raw
materials, components, and completed goods from one location to another. Transport is
always a barrier to product delivery since items are not always accessible on time,
attributed to inadequate transportation infrastructure.
https://www.abivin.com/post/5-factors-that-affect-supply

6. Give an example of the Law of Supply in real life. Explain. You may need to research
here.

One of the examples of the law of supply is when apple releases its new model of
iPhone, the old model will decrease its price as well as the supply of the old model.
Another example is when a store implements a clearance sale, they will reduce the cost
of their products as well as the supply of some products.

7. What is the Law of Supply & Demand? (1 pt. for the correct answer, and 1 pt. for an
explanation)

The law of supply and demand integrates two fundamental economic ideas that
describe how price changes influence the supply and demand for a resource,
commodity, or product.  The supply and demand law demonstrates the connection
between supply and demand in that a change in one generates a difference in the other.
According to the law of supply and demand, when there is a higher demand for a
 product, the supply of that commodity increases, and vice versa. The law of supply and
demand explains the interplay between a product's desire and supply.
https://www.investopedia.com/terms/l/law-of-supply-demand.asp
https://thebusinessprofessor.com/en_US/economic-analysis-monetary-policy/law-of-
supply-and-demand-definition

8. What do you mean by equilibrium price? (1 pt. for the correct answer, and 1 pt. for an
explanation)

Equilibrium is the condition in which market supply and demand complement each
other, resulting in stable pricing. The influence of supply and demand balancing
culminates in a condition of equilibrium. When a product is exchanged, the agreement
price is referred to as an equilibrium price or a market clearing price.
https://www.investopedia.com/terms/e/equilibrium.asp
https://www.alberta.ca/how-demand-and-supply-determine-market-price.aspx