Review

1. What will happen to the

volume of the customers
of SM? Why?
2. What does this implies?
3. How could you explain
the concept of ceteris
paribus on the situation?
 DEMAND
ANALYSIS
and
PRICE
ELASTICITY
INTENDED LEARNING OUTCOME

 To differentiate the
different determinants of  Critical thinking skills
demand  Innovativeness
 To evaluate the shifting  Effectiveness and
of demand Efficiency
 To compute for the
elasticity of demand in
price
OVERVIEW OF THE LESSON
I. DEMAND ANALYSIS
1. Determinants of demand
2. Demand function
3. Shifting of demand curve
II. PRICE ELASTICITY
1. Types of elastic demand
 Determinants of Demand
1. Normal goods - a good that experiences an
increase in demand due to an increase in a consumer's
income
2. Inferior goods - is one whose demand drops
when people's incomes rise.
3. Substitute goods
4. Complementary goods
 Demand Function
• It shows the relationship between quantity sold
of good or services and one or more variables
in equation.
Example:
Nathan and Joe are shopping for video games. Nathan's
demand function for video games is Q = 30 - 3P, and Joe's
demand function is Q = 48 - 4P. What will their combined
demand be if the price is $5? $11?
 Demand Function
Example: (BW)
The baker analyze the demand for the two muffin flavors. The
corn muffin has Q = 58 – 9P while the blueberry has Q = 65
– 12P. Currently the price of the muffin is P35.00. What is the
combined Qd of the two flavors with its given price? What
will be its combined Qd if the price will increase to 10%?
Shifting of Demand Curve
 Shifting of Demand Curve
Example:
Price Q Q1 Q2

25 92 88 90

28 90 80 88

35 80 65 75

40 72 60 70

43 60 50 55
 If the price of Nikes dropped by 25%,
how likely would you be to buy more
Nikes?

If the price of a Starbucks lattes

increased by 25%, how likely would
you be to buy fewer lattes?

If the price of electricity in your home

changed by 25%, how likely would you
be to change your electricity usage?
LIVE
PRICE
ELASTICITY
How will you describe
the word elasticity?
How will you connect the concept of
elasticity in the market?
 Price elasticity measures the
responsiveness of the quantity
demanded or supplied of a good to a
change in its price. It is computed as
the percentage change in quantity
demanded—or supplied—divided by the
percentage change in price.

https://www.investopedia.com/terms/e/elasticity.asp#:~:text=Price%20elasticity%20of
%20demand%20is,as%20price%20elasticity%20of%20demand.b
 LIVE
1. Elasticity can be described as
elastic—or very responsive—unit
elastic, or inelastic—not very
responsive.

2. Elastic demand or supply curves

indicate that the quantity demanded or
supplied responds to price changes in
a greater than proportional manner.

https://www.khanacademy.org/economics-finance-domain/microeconomics/elasticity-tutorial/price-elasticity-tutorial/a/price-elasticity-of-demand-
and-price-elasticity-of-supply-cnx?modal=1
 Price
Elasticity
 CREDITS: This presentation template was created by Slidesgo,
including icons by Flaticon, and infographics & images by Freepik
 Price Elasticity of Price
Example:
Yesterday, the price of envelopes was $3 a box,
and Julie was willing to buy 10 boxes. Today, the
price has gone up to $3.75 a box, and Julie is now
willing to buy 8 boxes. Is Julie's demand for
envelopes elastic or inelastic? What is Julie's
elasticity of demand?
 BW
Katherine advertises to sell cookies for $4 a dozen.
She sells 50 dozen, and decides that she can charge
more. She raises the price to $6 a dozen and sells 40
dozen.
a) What is the elasticity of demand?
b) Assuming that the demand remains the same,
how many would she sell if the price were $10 a
box?
Price Elasticity of Demand
Demand Schedule
Case Price Quantity
A 9 2
B 8 4
C 5.50 9
D 4.50 11
E 2 16
F 1 18
SW
Demand Schedule
Case Price Quantity Pe
A 12 4
B 9 9 1. ________
C 7 12 2. ________
D 6.50 14 3. ________
E 4 18 4. ________
F 2 20 5. ________
 EQ
How can you make your
decision more effective and
efficient in times of inflation?
OVERVIEW OF THE LESSON
I. DEMAND ANALYSIS
1. Determinants of demand
2. Demand function
3. Shifting of demand curve
II. PRICE ELASTICITY
1. Types of elastic demand
LIVE

Thank you
and
God bless