APPLIED ECONOMICS CETERIS PARIBUS:

----------------------------------- ● A shorthand indication of the effect of the

one economic variable on another, provided all
LAW OF DEMAND other variables remain the same.
● All things remaining constant.
Basic Commodities:
- The term Commodity, as used
Demand Curve:
in economics, pertains to a
● A graphical representation of the relationship
homogenous good that between the price of a good or service and the
commands a price. quantity demanded for a given period of time.

EXAMPLES: ● A demand curve illustrates the linear attribute

of the law of demand.
✓ GRAIN
- Rice, corn and / or wheat

✓ UTILITIES
- Electricity, water, cable and / or internet

✓ BULK
- Oil, sugar, salt and etc.
Commodities are distinguished by their
homogeneity which makes them tradable.
The inverse relationship between price and
quantity demanded is represented by the
Demand: downward-sloping demand curve.

[di-`mand]
● An economic principle referring to a Demand Schedule:
consumer`s desire to purchase goods and ● A table that shows the quantity demanded for
services and willingness to pay a price for a a good or service at different price levels.
specific good or service.
Consumer utility forms the basis of law of
demand Income:
● Normal Goods
Law of Demand: ● Inferior Goods
● A fundamental principle of economics that ● Luxury Goods
states that a higher price consumers will
● Necessity Goods
demand a lower quantity of a good.
● Veblen Goods
● Substitute Goods Movement along the Demand Curve versus
Shift of the Demand Curve:
● Complementary Goods
Equation:
QD = a – bP
Consumer Expectations:
where: QD = a – bP
● Another factor that influences price and
quantity demanded is consumer expectations. QD – quantity demanded
When consumers anticipate the price of a
particular product to rise, they will tend to buy a – constant
more of that product now before the perceived b – represent the slope
or scheduled price increase. This is commonly
observed in the case of oil price increases. P – price
Motorists anticipating a fuel price increase will Price-driven changes to the quantity
likely gas up before the price adjustment demanded are represented by a movement
becomes effective. along the demand curve while variables other
than price will shift the demand curve.

LET US TRY THIS:

A producer thinks there is a demand for
1000 pieces of pencils priced at Php 8.00
per piece, but if the price of pencils does
not change, consumers may not buy 10
pieces. How many of the demand for 1000
pencils will be sold if its price remains at

Taste Preferences: Php 8.00 per piece?

● Considerations such as increased popularity,

taste, and personal preference influence the Solution:
demand for a specific good. This is more evident
in the case of branded products. QD = a – bP QD = a - bP
= 1000 – 10(8) = 1000 – 10(9)
= 1000 – 80 = 1000 - 90
QD = 920 QD = 910
LAW OF SUPPLY
Determinants of Supply:
Law of Supply and Demand: ● Price of a Good
● A theory that explains the interaction ● Price of Related Goods
between the sellers of a resource and the
buyers of that resource. ● Price of Inputs

SUPPLY: ● State of the art technology

● Supply is based on the profit- maximizing ● Taxes and subsidies

characteristics of firms.
Law of Supply:
● Ceteris paribus, an increase in price causes an
increase in quantity supplied.
● Nature of Competition
● Firm’s business objective
Taxes, subsidies, and import quotas are
government policies that directly influence
supply of goods and services.

Supply Curve:
● Direct relationship between price and
quantity supplied is best explained by looking at
the supply curve.
● A graphic representation of the correlation
between the cost of a good or service and the
quantity supplied for a given period.
● Points along the curve correspond to the
quantity supplied at varying price level.
Movement along the Supply Curve versus Shift
of the Supply Curve:
Equation:
● QS = c + dP
● QS = a + bP

Illustrates the linear characteristics of the law
of supply.
where: QS = c + dP o QS = a + bP
Qs – quantity supply
c / a – constant (assumed not to change)
d / b – represent the slope (positive)
P – price
MARKET EQUILIBRIUM: Suggested Retail Price:
Equilibrium: ● SRPs provide a benchmark for consumers to
compare market prices.
● A state in which supply and demand for a
given good or service is in balance. ● Some SRPs are stamped on the packaging of
products.
● Equilibrium means a state of equality or
balance between market demand and market Consumer Protection Group (CPG)
supply.
Example policy of CPG:
● Prices where demand and supply are out of
balance are called points of disequilibrium. ● `No Return, No Exchange`
● If the store accepts return or exchange it will
be within seven days of purchase.
-----------------------------
Applications of Supply and Demand
Market Structures
1. Degree of Competition
2. Number of firms
3. Bargaining Power of Consumer
4. Barrier to entry
“Firms are categorized into industries, and
industries may be classified based on their
market.”
MARKET STRUCTURES:
● Perfect Competition
● Monopolistic Competition
Market disequilibrium results to either surplus ● Oligopoly
or shortage of goods and services.
● Monopoly
Economic Growth as a Macroeconomic Goal:
CONSUMER PROTECTION:
The Philippine Labor Market
● Equilibrium price is also referred to as the
prevailing market price, which is the price that ● Labor force
consumers pay. ● Population growth
● Unemployment and wages
Department of Trade and Industry (DTI) ● Minimum wage
● Labor migration and OFWs
LABOR FORCE PARTICIPATION RATE
UNEMPLOYMENT RATE
Contemporary Economic Issues Facing the
Filipino Entrepreneur
ENTREPRENEUR:
● An individual who creates a new business,
bearing most of the risk and enjoying most of
the rewards.
Type of Business Structures:
● Sole Proprietorship – An unincorporated
business that has just one owner who pays
personal income tax on profits earned from the
business.
● Partnership – A formal arrangement made by
two or more parties to manage and operate a
business and share its profits.
● Corporation - A legal entity that is separate
and distinct from its owners.
New Business Registration:
1.) DTI - Register business name
2.) Barangay - Secure barangay clearance
3.) Municipality - Get a business permit
4.) BIR - Apply for tax identification number
(TIN); secure authority to print receipts; have
ledgers and invoices stamped.
5.) SSS - Apply as self-employed owner
Issues and Challenges facing the Filipino
Entrepreneur
INVESTMENTS, INTEREST, and FINANCING:
●GRANTS AND LOANS - USE ONE`S OWN FUND
● EXTERNAL FINANCING
● CROWD SOURCING - Allows entrepreneurs to
fund their business ventures and ideas by
presenting and reaching out to more investors
and people on the internet.
Issues and Challenges:
● RENT - A contract by which one conveys real
estate, equipment, or facilities for specified
term and for a specified rent.
● MINIMUM WAGE - The cost incurred by
companies to pay hourly/ daily an employee.
● TAXES - Mandatory payments collected from
individuals and corporations by a government
entity to fund government activity.
TAXES:
● Paid by entities that are paid by entities that
are exempt from VAT.
● Value Added Tax (VAT) – A consumption tax
on goods and services that is levied at each
stage of the supply chain where value is added,
from initial production to the point of sale.
● Capital Gain – The increase in the value of an
asset relative to the price that was originally
paid for it.
● Income Tax – Payments made by individuals
and corporations to a government entity based
on their taxable income.