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WHOLE BRAIN LEARNING SYSTEM

OUTCOME-BASED EDUCATION

SENIOR HIGH SCHOOL GRADE

Applied Economics
11/12

LEARNING QUARTER I

MODULE WEEK
4

WBLS-OBE MELC-Aligned Self-Learning Module Applied Economics 11/12 0

 MODULE IN

APPLIED ECONOMICS

QUARTER I
WEEK 4

PRINCIPLES OF ECONOMICS

Development Team
Writer: Mary Grace L. Santos

Editors/Reviewers: Florendo Damaso Jr. Rhonel S. Bandiola

Illustrator: Clifford B. Hernaez

Layout Artist: Mary Grace L. Santos

Management Team:

Vilma D. Eda Lourdes B. Arucan

Juanito V. Labao Imelda Fatima G. Hernaez

WBLS-OBE MELC-Aligned Self-Learning Module Applied Economics 11/12 1

 WHAT I NEED TO KNOW

What this module is about?

This module is a SELF-PACED learning material for you to continue your studies in the
comfort and safety of your home.
In this module, the determination of prices of commodities will be developed. This simple
model to broaden your knowledge from law of demand, supply, equilibrium to changes in
equilibrium price and output.
Activities are found in every lesson to test your understanding and to help you retain better
what you have learned.

Most Essential Learning Competencies (MELC):

Determine the implications on market pricing on economic decision- making.

What you are expected to learn?

At the end of this module, you are expected to:
 determine the implications of market pricing in making economic decisions;
 explore the elasticity of demand and supply;
 solve problems on price elasticity of demand and supply;
 value the implications of market pricing in decision making.

Important Reminder
DO NOT WRITE ANYTHING IN THIS MODULE. This module is a government property
and other learners will use it again. You may use any clean sheet of paper that is available in
your home for your answers in the given activities. The rubrics and answer key for the activities
are found in the latter page of this module for you to self-check your answers. This module will
be retrieved by the end of the week.

WBLS-OBE MELC-Aligned Self-Learning Module Applied Economics 11/12 2

 WHAT I KNOW

This is to test your prior knowledge on the given lesson. Read and follow the
instructions carefully.

Pretest.
Following the given directions in the following activities. Prepare any clean sheet of paper for your
answers and label it as WHAT I KNOW.

I. GRAPH ANALYSIS
Direction: Please analyze the graph and answer the questions below.

Source: https://study.com/academy/lesson/characteristics-of-the-price-system-in-a-market-economy.html

1. When do you have a surplus in the supply of product?

2. When do you have a shortage in the supply of product?
3. Using the chart above, kindly describe the point where there is a
a) Surplus
b) Shortage
c) Equilibrium in price
4. What is surplus, shortage and equilibrium price? Define the terms.

II. MULTIPLE CHOICE

Direction: Please read the statements carefully. Write the correct answers on your paper.
1. In the market, the price elasticity for the demand of canned goods sold by Aling Gracia
Grocery Store is the:
a) ratio of the percentage changes in quantity demanded for the goods to the
percentage change in its price
b) responsiveness of revenue to a change in quantity of the canned goods

WBLS-OBE MELC-Aligned Self-Learning Module Applied Economics 11/12 3

 c) ratio of the change in quantity demanded divided by the change in its
price of the canned goods
d) response of revenue to a change in the price

2. If demand for sacks of rice in Aling Puring Grocery Store is price elastic, then a:
a) rise in the price of sacks of rice will raise total revenue of the grocery
b) fall in the price of sacks of rice will raise total revenue of the store
c) fall in the price of sacks of rice will lower the quantity demanded
d) rise in the price of sacks of rice won't have any effect on total revenues
3. If the cross-price elasticity between soap bar and liquid soap commodities is 1.5,
a) the two goods are luxury goods
b) the two goods are complements
c) the two goods are substitutes
d) the two goods are normal goods
4. The price elasticity of demand for a certain good tends to be:
a) smaller in the long run than in the short run
b) smaller in the short run than in the long run
c) larger in the short run than in the long run
d) unrelated to the length of time
5. If the price elasticity of supply of cup noodles is 0.60 and the price increase by
3 percent, then the quantity supplied for cup noodles increases by how by?
a) 0.60 percent.
b) 0.20 percent
c) 1.8 percent
d) 18 percent

WBLS-OBE MELC-Aligned Self-Learning Module Applied Economics 11/12 4

 Lesson MARKET PRICING ON MAKING ECONOMIC
1 DECISION

WHAT’S IN

Activity 1.1. Looking back to your lesson

Direction: As we go further, let us try to recall the concepts of market demand, market supply and
market equilibrium. Accomplish the following activities. Prepare any clean sheet of paper as your
answer sheet for the following activities. Label this activity as Activity 1.1.

PART I. TRUE OR FALSE

Directions: Write TRUE if the statement is correct and FALSE if incorrect.
1. _______The equilibrium point is the level where the demand and supply curves intersect.
2. _______If the price is above the equilibrium level, the quantity demanded is greater than
the quantity supplied.
3. _______If the price is below the equilibrium point, the quantity demanded is lesser than
the quantity supplied.
4. _______The law of demand applies during online sales of computers when consumers
rush to buy products at 30% discounts.
5. The law of supply applies when the producers supply more masks at a higher price; selling
at higher quantity at a higher price increases revenue.
6. _______If the price is below the equilibrium level, then the quantity demanded will exceed
the quantity supplied.
7. _______Shortage will exist if the price is below the equilibrium point
8. _______The law of supply and demand explains the interaction between the sellers of a
product and the buyers.
9. _______The demand curve is always downward sloping due to the law of diminishing
marginal utility.
10. ______The supply curve shows an upward slope.

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 PART II. COMPLETE THE SENTENCE
Directions: Give the meaning of the following words/phrases.
1. Price Elasticity _______________________________________________________
2. Price Elasticity of Demand ______________________________________________
3. Price Elasticity of Supply _______________________________________________

WHAT’S NEW

Article on Demand, Supply and Elasticity

Please read this article on Demand, Supply and Elasticity of Clean Water in the Philippines.
This will help you understand better our new lesson. Enjoy reading!

Demand, Supply and Elasticity of Clean Water in the Philippines

8/27/2015

According to an article created by Vice News, there

are 55people who die in the Philippines every day because

of the lack of clean water. As one can see clean water is

greatly needed by all people. As a student who is lucky to

be given all the necessities needed in life it would be normal

not to think of this because we normally do not notice it.

However, we need to. According to Katrina Arianne Ebora,

who works for UNICEF’s Water, Sanitation and Hygiene

program in the Philippines stated that “Over 30 million

people in the Philippines do not have access to improved.

sanitation facilities.” Also, according to the PIS by 2050 the

population of the areas with poverty in Manila will reach

over 9 million!

With the rising population of the Philippines there will be a

problem with the economy of clean water because there will

WBLS-OBE MELC-Aligned Self-Learning Module Applied Economics 11/12 6
be too much demand for the supply of water. .
Article: https://redmonteconomics.weebly.com/blog/demand-supply-and-elasticity-of-clean-water-in-the-philippines
The Marketing Price System
Last module, we talked about the market demand, market supply and market equilibrium.
In our new topic, we will link more of these variables to the market price system. For example, in
the article above, the causes and effects of the water shortage around the Philippines could be
best explained if we could understand the concepts of demand and supply elasticity of the clean
water.
A shortage is when there is an excess demand for the quantity
supplied. While surplus is excess in supply.
For example, if there are 10 bottles of water and there are 20 students
who want drinking these, then there will be only 10 students whose demands
are met while the others will not be able to be given anything. There is
shortage in the supply.

If producers make too many bottles of water and consumers cannot by

Price them wantintoabuy
System them, Economy
Market there will be surplus.

Let us find out more about the price system. We have learned that demand is the
willingness of the consumers to buy goods and services. In economics, the willingness to buy
goods and services should be accompanied by the ability to buy, also called the “purchasing
power”. This is referred to as an effective demand (source: Investopedia)

EQUILIBRIUM CHARACTERISTICS

Equilibrium is a point of balance or a point

The supply and demand are balanced in
of rest. It is also called “market-clearing
equilibrium.
price”.

Equilibrium price is the price at which the The economic forces are balanced and in
producer can sell all the units he wants to the absence of external influences, the
produce and the buyer can buy all the units (equilibrium) values of economic variables
he wants. will not Change.

The amount of goods or services sought by

Quantity demanded and quantities supplied
buyers is equal to the amount of goods or
are equal.
services produced by sellers.

Price System in a Market Economy: Its Characteristics

Let us learn more! The prices of goods that we encounter every day to the things we buy
plays a crucial role in determining an efficient distribution of resources in a market system. The
prices will help us to make every day economic decisions about our needs and desires. They are
the indications of the acceptance of a product; the more popular the product, the higher the price
that can be charged.
Example is when a tables are for sale in your community today and is assumed that they are not
very important as compared to other products or commodities that we need to survive especially
that our movements are very limited.

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 Neither the producers nor Price acts as a signal for shortages and surpluses which
consumers can impact prices; help firms and consumers respond to changing market
consumers can buy whatever they conditions.
want; nor can producers make and
If a good is in shortage – price will tend to rise. Rising
sell whatever they want Prices are
prices discourage demand, and encourage firms to
decided by interactions between
try and increase supply.
the producers and the consumers.
If a good is in surplus – price will tend to fall. Falling
price encourage people to buy, and cause firms to try
and cut back on supply.
Prices help to redistribute resources from goods with
little demand to goods and services.

The market price is the point that We explore more how equilibrium happens.
the supply and demand curves Let us analyze the chart below.
intersect.
The chart shows a surplus – the quantity is greater
(Judge, S. 2020)
than demand. When quantity is greater than demand it
causes prices to go down.

Figure 1.
The Equilibrium Point or the

Market Price Point

Figure 2. Surplus Point

https://study.comacademy/lesson/characteristics-of-the-price-system-in-a-market-economy.html

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Prices are Market Driven

Figure
The producers can make what they want and
3.
consumers are free to purchase what they want.
This means that customers live in a market
economy. When prices are high, supply increases
as many firms join the market. (Judge, S. 2020).

Let’s say the units of cellular phones. The

numbers of suppliers have increased because of
high prices of the cellular phones. When
smartphones were new in the market, there were Shortage Point
fewer producers and prices were high.
The high prices attracted the producers to
join the market. (Judge, S. 2020).
In shortage, quantity is less than the
demand; it causes prices to go up due
https://study.com/academy/lesson/characteristics-of-the- to scarcity.
pricesystem-in-a-market-economy.html
Example of which is the shortage in
https://www.economicsonline.co.uk/Competitive_markets/Price masks and ethyl alcohol in the market.
_elasticity_of_dem and.htm
There is shortage in the supply, thus,
price tends to go up or tends to go
higher (Judge, S. 2020).

The 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

Again, what is a demand? We said last time that it is the desire of a consumer to purchase
goods or services and willingness to pay a at for that product or services at a given price.
If all other factors remain equal, the higher the price of a good, the fewer people will
demand that good, “the higher the price, the lower
the quantity demanded” and vice versa.
(source: Investopedia)

The demand curve is always downward

sloping due to the law of diminishing
marginal utility.

WBLS-OBE MELC-Aligned Self-Learning Module Applied Economics 11/12 9

 https://www.ducksters.com/money/supply_and_demand.php

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 The quantity supplied and vice versa.

https://www.ducksters.com/money/supply_and_demand.php

The law of supply says … “as the price of a product increases, companies will produce
more of the Product”. When graphing the supply vs. the price, the slope rises.

How Do Supply and Demand Create an Equilibrium Price?

Equilibrium price is the price at which a producer can sell all the units he wants to
produce and a 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 t to charge higher, the more they
will be willing to produce and bring products 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
https://www.ducksters.com/money/supply_and_demand.php
to pay for at that price.
https://www.investopedia.com/terms/l/law-of-supply-demand.asp

https://www.thoughtco.com/calculating-economic-
equilibrium-1147698

WBLS-OBE MELC-Aligned Self-Learning Module Applied Economics 11/12 10

 Price Elasticity of Demand and Supply

Can you guess what happened with this mom in a market?

Price elasticity measures the responsiveness of the quantity

demanded or supplied of a good to a change in its price. Elasticity
can be described as:
a) elastic or very responsive and;
b) unit elastic, or inelastic or not very responsive.
(source: Investopedia)

Effects of Change in Demand and Supply

 Elastic demand or supply curve indicates that quantity demanded or supplied respond to
price changes in a greater than proportional manner.
 Inelastic demand or supply curve is one where a given percentage change in price will
cause a smaller percentage change in quantity demanded or supplied.
 Unitary elasticity means that a given percentage changes in price leads to an equal
percentage change in quantity demanded or supplied.

CATEGORIES OF PRICE ELASTICITY

According to Agarwal, P. (2018) and Judge, S. (2020), there are four categories of price
elasticity are the following:
I. The Price Elasticity of Demand
Price elasticity of demand is the responsiveness of quantity demanded, or how much
quantity demanded changes, given a change in the price of goods or services.
*The mathematical value is
negative. A negative value indicates an
inverse relationship between price and the
quantity demanded. But the negative sign
is ignored (Judge, S. 2020).
Price Elasticity of Demand (PED)= %
change in quantity demanded %
Change in price

Figure 4 Price Elasticity of Demand

https://www.economicsonline.co.uk/Competiti
ve_markets/Price_elasticity_of_demand.html

WBLS-OBE MELC-Aligned Self-Learning Module Applied Economics 11/12 11

a) Elastic Demand (PED > 1) - the percentage change in price brings about a more than
proportionate change in quantity demanded.
When the percentage change in quantity demanded is greater than the percentage
change in price, and the coefficient of the elasticity is greater than 1.
Example real estate- housing - There are many different housing choices. People may live in a
townhouse, condos, apartments, or resorts. The options make easy for people to not pay more
than they demand.

b) Inelastic Demand (coefficient of the elasticity is less than 1) – is when an increase in

price causes a smaller % fall in demand.
When the percentage change in quantity demanded is less than the percentage change
in price, and the coefficient of the elasticity is less than 1.
Example: Gasoline – gasoline has few alternatives; people with cars consider it as a necessity
and they need to buy gasoline. There are weak substitutes, such as train riding, walking and
buses. If the price of gasoline goes up, demand is very inelastic.
Other Examples: Diamonds, aircon, Iphone, Cigarettes
c) Unitary Elastic Demand - When the percentage change in demand is equal to the
percentage change in price, the product is said to have Unitary Elastic demand.
Unitary elastic - PED or the price elasticity of demand is 1

d) Perfectly Elastic - a small percentage change in price brings about a change in quantity
demanded from zero to infinity
Perfectly elastic - the coefficient of elasticity is equal to infinity (∞)

e) Perfectly Inelastic - the PED is =0 any change in price will not have any effect on the demand
of the product.
Perfectly inelastic - the percentage change in demand will be equal to zero (0)

POINT ELASTICITY
a) The midpoint elasticity is less than 1. (Ed < 1). Price reduction leads to reduction
in the total revenue of the firm.
b) The demand curve is linear (straight line), it has a unitary elasticity at the midpoint.
The total revenue is maximum at this point.
c) Any point above the midpoint has elasticity greater than 1, (Ed > 1).

WBLS-OBE MELC-Aligned Self-Learning Module Applied Economics 11/12 12

II. The Income Elasticity of Demand (YED)
The income elasticity of demand is the relationship between changes in quantity
demanded for a good and a change in real income.12
• YED = % ℎ % ℎ

Normal Goods – are those goods for which the demand rises as consumer income rises;
positive income elasticity of demand so as consumers’ income rises more is demanded at
each price. These goods shift to the right as income rises.

YED is positive. As income rises, the proportion spent on cheap goods will reduce as now
they can afford to buy more expensive goods.

Example (the demand for units of air-conditioning increases as the income of the consumer
increases and the demand for electric fan decreases)
Normal good: units of air-conditioning; Inferior good: electric fan

The Inferior Goods – the demand decreases when consumer income rises; demand
increases when consumer income decreases) ---------- Shifts to the left as income rises.

III. Cross Price Elasticity of Demand or (XED)

YED is negative. • As income rises, the proportion spent on cheap goods will reduce as
Cross
now they canprice elasticity
afford of demand
to buy more is he goods.
expensive effect on the change
Examples: theindemand
demandfor
ofcheap/
one good as a
result of a change in price
generic electronic goods… of related to another product.

•(let
XEDsay
= electric
% change fans) will fall demanded
in quantity as people income
of goodrises and theyinwill
X% Change switch
price to Y… If
of good
expensive branded
If the value ofelectronic goods (unit
XED is positive of air-conditioning).
- substitute goods
If the value of XED is negative – complements goods
If the value of XED is zero- two goods are unrelated

IV. Price Elasticity of Supply (PES)

The measure of the responsiveness of quantity to a change in price. It is the percentage
change in supply as compared to the percentage change in price of a commodity.
PES = % change in quantity Supplied % change in Price
If supply is elastic, producers can
increase output without a rise in cost or a
time delay. If supply is inelastic, firms find
it hard to change production in a given
time period.
https://www.intelligenteconomist.com/price-elasticityof-supply

WBLS-OBE MELC-Aligned Self-Learning Module Applied Economics 11/12 13

 PES = % change in quantity Supplied % change in Price
If Pes > 1 = supply is price elastic
Pes = 0 = supply is perfectly inelastic
Pes = infinity = supply is perfectly elastic
Pes < 1 = supply is price inelastic

PRICE ELASTICITY OF SUPPLY

ELASTIC SUPPLY INELASTIC SUPPLY

PERFECTLY INELASTIC SUPPLY PERFECTLY INELASTIC SUPPLY

https://www.intelligenteconomist.com/price-elasticity-of-supply

Determinants of Price Elasticity of Supply

Agarwal, P. (2020) said, price elasticity of supply can be influenced by the following factors:

1. Marginal Cost- If the cost of producing one more unit keeps rising as output rises or marginal
cost rises rapidly with an increase in output, the rate of output production will be limited. The

WBLS-OBE MELC-Aligned Self-Learning Module Applied Economics 11/12 14

 Price Elasticity of Supply will be inelastic - the percentage of quantity supplied changes less
than the change in price. If Marginal Cost rises slowly, supply will be elastic.

2. Time - Over time price elasticity of supply tends to become more elastic. The producers would
increase the quantity supplied by a larger percentage than an increase in price.

3. Number of Firms - The larger the number of firms, the more likely the supply is elastic. The
firms can jump in to fill in the void in supply.

4. Mobility of Factors of Production- If factors of production are movable, the price elasticity of
supply tends to be more elastic. The labor and other inputs can be brought in from other location
to increase the capacity quickly.

5. Capacity - If firms have spare capacity, the price elasticity of supply is elastic. The firm can
increase output without experiencing an increase in costs, and quickly with a change in price.

WHAT’S MORE

Activity 1.2.
Direction: Accomplish the following activities. Read and follow the directions carefully. Use any
clean sheet of paper as your answer sheet. Label it as Activity 1.2.

PART I. Problem Solving and Critical Thinking Analysis

Direction: Please analyze the problems carefully. Answer the problems and present
your solutions. Interpret the results.

1) If there are 10 bottles of water and there are 20 students who want to drink these bottles of
water, there will be only 10 students whose demands are met while the others will not.
Analysis: We can conclude that there is _____________________ in the supply.

2. If price of canned good in the grocery store increases by 8% and the quantity demanded
decreases by 12%, what is price elasticity of demand? Is it elastic, inelastic or unitary elastic?
Solution:

WBLS-OBE MELC-Aligned Self-Learning Module Applied Economics 11/12 15

Interpretation: This means it is _____________________________________

3. If a 4% increase in price of 1 pack of bread leads to an increase in the quantity supplied of 8%

describe the price elasticity.

Solution:
Analysis of Price elasticity: ________________________________________

PART II. Solving Problem on Price Elasticity

Directions: Analyze each problem carefully. Answer the questions below.
1. Suppose the price of ethyl alcohol rises by 20 %. As a result, the demand for substitute hand
soap rises by 10 %.

A) What is the cross-elasticity of demand for hand soap with respect to the price of
ethyl alcohol? Encircle your answer. Present your solution.
a. +2 b. + 0.5 c. – 0.5 d. –2
B) Analysis on price elasticity _________________________________________

C) Interpret your analysis on the kind of good_____________________________

2. If a 20% decrease in the price of international calls lead to a 35% increase in the quantity of
calls demanded, we can conclude that the demand for phone calls is:
a. Solution:

b. Analysis on price elasticity __________________________________

WHAT I HAVE LEARNED

 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.

WBLS-OBE MELC-Aligned Self-Learning Module Applied Economics 11/12 16

 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.
 Excess supply or surplus will exist. In either case, economic pressures will push the price
toward the equilibrium level.

WHAT I CAN DO

Activity 1.3. Check Your Understanding.

Direction: Accomplish the following activities. Read and follow the directions carefully. Use any
clean sheet of paper as your answer sheet. Label it as Activity 1.2.

PART I. Identification.
Directions: Please read the sentences carefully. Identify the word or phrase that is appropriate to
each item.
1. A ________________ shows the relationship between quantity demanded and price in a given
market on a graph.
2. The ____________________ states that, higher the price, the higher the quantity supplied.
3. __________________means that a given percentage changes in price leads to an equal
percentage change in quantity demanded or supplied.
4. _______________means the effect on the change in demand of one good as a result of a
change in price of related to another product.
5. __________________ those goods for which the demand rises as consumer income rises.
6. _______________the coefficient of the elasticity is less than 1; when an increase in price
causes a smaller % fall in demand.

Part II. Enumeration on Price Elasticity of Goods

Directions: Please conduct a survey or observe the market in your vicinity. This can make you
aware of your environments. Give examples of goods considered as elastic and inelastic. You
may work with your parents and siblings.

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 ELASTIC GOODS INELASTIC GOODS

1. 1.

2. 2.

3. 3.

4. 4.

5. 5.

ASSESSMENT

Post-test. True or False

Directions: Write TRUE if the statement is correct and FALSE if incorrect. Write your answers in
any clean sheet of paper and label it as ASSESSMENT.

1. Elasticity of demand refers to the change in demand when there is a change in another factor
such as price or income.

2. If demand for a good or service is static even when the price changes, demand is said to be
inelastic.

3. Examples of elastic goods include gasoline, while inelastic goods are items like canned goods
and vitamin c tablets.

4. The law of demand states that “elasticity shows how much a good or service is demanded
relative to its movement in price”.

5. Inelastic demand is when a demanded quantity for masks changes by a greater percentage
compared to its percentage change in price.

6. The opposite of a market economy is a planned economy, where investment and production
decisions are decided by the government.

7. Unit elastic is when a percentage change in demand equals the price.

WBLS-OBE MELC-Aligned Self-Learning Module Applied Economics 11/12 18

8. A mango fruit with an elastic demand gets more sales when its price drops slightly. When its
price goes up, it stays longer in the box.

9. The demand curve shows how quantity demanded for apple responds to price changes. The
flatter the curve, the more elastic is the demand for an apple.

10. The midpoint elasticity is greater than 1

WEEK 4 Output
You are required to write a minimum of 100 words and maximum 300 words Reflective. Use the
guide questions provided in the article for your reference. Write your answer in a letter-sized
coupon bond. This serves as your week 4 output. The rubrics for this output is located at the latter
part of this module.

REFLECTIVE
LEARNING SHEET

WBLS-OBE MELC-Aligned Self-Learning Module Applied Economics 11/12 19

 HOW DO YOU RESPOND TO PRICE
ELASTICITY?
People have unlimited needs and wants for
their personal satisfaction and because of
that the prices of products easily get
changed.
Everyone is affected with the new normal in
the market. The prices of products have
become very expensive since the outbreak of
the pandemic, not only in our locality, but in
the whole world.

If your income or the income of your family

is not enough to purchase the same items https://www.escoffier.edu/blog/industry-
news/choosing-the-best-reusable-
you were buying before the pandemic, what grocery-bag/
goods would you buy instead?
What economic or marketing strategies
would you apply? How would you respond to
the price changes of these commodities?

Traits 4 3 2 1

Focus & Details There is one There is one There is one The topic and
clear, well clear, well topic. Main main ideas are
focused topic. focused topic. ideas are not clear.
Main ideas are Main ideas are somewhat
clear and are clear but are clear.
well supported not well
by detailed and supported by
accurate detailed
information. information.
Organization The The introduction The introduction There is no clear
introduction is states the main states the main introduction,
inviting, states topic and topic. A structure, or
the main topic, provides an conclusion is conclusion.
and provides overview of the included.
an overview of paper. A
the paper. conclusion is
Information is included.
relevant and
presented in a
logical order.

WBLS-OBE MELC-Aligned Self-Learning Module Applied Economics 11/12 20

 The conclusion
is strong.
Voice The author’s The author’s The author’s The author’s
purpose of purpose of purpose of purpose of
writing is very writing is writing is writing is
clear, and somewhat somewhat unclear.
there is strong clear, and there clear, and there
evidence of is some is evidence of
attention to evidence of attention to
audience. The attention to audience. The
author’s audience. The author’s
extensive author’s knowledge
knowledge knowledge and/or
and/or and/or experience with
experience experience with the topic is/are
with the topic the topic is/are limited.
is/are evident. evident
Word Choice The author The author The author The writer uses
uses vivid uses vivid uses words that a limited
words and words and communicate vocabulary.
phrases. The phrases. The clearly, but the Jargon or clichés
choice and choice and writing lacks may be present
placement of placement of variety. and detract from
words seems words is the meaning.
accurate, inaccurate at
natural, and times and/or
not forced. seems
overdone.
Sentence All sentences Most sentences Most sentences Sentences
Structure, are well are well are well sound awkward,
Grammar, constructed constructed and constructed, but are distractingly
Mechanics, & and have have varied they have a repetitive, or are
Spelling varied structure and similar structure difficult to
structure and length. The and/or length. understand. The
length. The author makes a The author author makes
author makes few errors in makes several numerous errors
no errors in grammar, errors in in grammar,
grammar, mechanics, grammar, mechanics,
mechanics, and/or spelling, mechanics, and/or spelling
and/or spelling. but they do not and/or spelling that interfere
interfere with that interfere with
understanding. with understanding.
understanding.

WBLS-OBE MELC-Aligned Self-Learning Module Applied Economics 11/12 21

 Congratulations! You are done with Module 4.
I hope you had fun learning new things that broaden
your understanding in Applied Economics.

ANSWER KEY

WHAT I KNOW

Part I. Graph Analysis

1) Quantity supplied is greater than quantity demanded
2) Quantity demanded is greater than quantity supplied
3)
a) Above the equilibrium point
b) Below the equilibrium point
c) The surplus and shortage points meet or intersect
4) Oversupply/surplus – the quantity supplied is greater than the quantity demanded
Shortage/scarcity - the quantity supplied is less than quantity demanded
Equilibrium - the point where the demand and supply curves intersect.

Part II Multiple Choice

1) A
2) B
3) C
4) B

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5) C

WHAT’S IN

True or False
1. TRUE 6. TRUE
2. TRUE 7. TRUE
3. FALSE 8. TRUE
4. TRUE 9. TRUE
5. FALSE 10. FALSE

Part II Make meaning internet assisted activity

Price Elasticity – responsiveness of the market place to a change in price for a product.
Price Elasticity of Demand – economic measure of the change in the quantity demanded or
purchased of product in relation to price changes.
Price Elasticity of Supply- measures the responsiveness to the supply of goods or services
after a change in its market price (source: investopedia)

WHAT’S MORE
Part I
1. Scarcity in the supply of bottled water
2. Solution: -12%/8% = -.12/.08 = ______________________
Answer -1.5. Again, drop the negative sign, so the elasticity is 1.5.
Interpretation: Elastic (greater than 1)

3. First compute the price elasticity of demand, which is the percentage change in quantity
demanded divided by the percentage change in price
Solution: price elasticity = 35%/ (-20%)
Answer: price elasticity = -175
Interpretation: The price elasticity is larger than one in absolute value, demand is elastic.

Part II

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1. XED = % ℎ % ℎ •
If the value of XED is positive - substitute goods
a) 20/10= 2
b) Positive
c) It’s a substitute good
2. First compute the price elasticity of demand, which is the percentage change in
quantity demanded divided by the percentage change in price
a) Solution: price elasticity = 35%/ (-20%) Again, drop the negative sign
b) Answer: price elasticity = -1.75
c) Interpretation: Since the price elasticity is larger than one in absolute value,
demand is elastic.

WHAT I CAN DO
1. Demand Curve
2. The Law of Supply
3. Unitary Elasticity
4. Cross Price Elasticity of Demand
5. Normal Goods
6. Inelastic Demand
Part II. Price Elasticity of Goods
Elatic Goods
InElastic Goods

POST TEST:
Part I. True or False
1. TRUE 6. TRUE
2. TRUE 7. TRUE
3. FALSE 8. TRUE
4. TRUE 9. TRUE
5. FALSE 10. FALSE

WBLS-OBE MELC-Aligned Self-Learning Module Applied Economics 11/12 24

 REFERENCES:

Articles
 Tullao, Tereso Jr. S. (2016). Applied Economics
for a progressive Philippines.Quezon City: PHOENIX
Publishing House, Inc.
 Agarwal, P. (2018) Price Elasticity of Supply.
Retrieved on June 04 2020 from
https://www.intelligenteconomist.com/price-elasticity-
of-supply
 Amadeo, K. (2020) Elastic Demand with Its
Formula, Curve, and Examples Retrieved on June 04
2020 from https://www.thebalance.com/elastic-demand-definition-formula-
curve-examples-3305836; https://www.thebalance.com/inelastic-demand-
definition-formula-curve-examples-3305935
 Judge, S. (2020) Characteristics of the Price System in a Market Economy.
Retrieved on June 04 2020 from
https://study.com/academy/lesson/characteristics-of-the-price-system-in-a-
market-economy.html
 Pettinger, T. (2019) Role and Function of Price in Economy Retrieved on June
04 2020 from https://www.economicshelp.org/blog/1170/economics/role-and-
function-of-price-in-economy/
Websites
https://www.slideshare.net/kalaiyarasidanabalan/a-level-economics-chapter-2-core
https://www.investopedia.com/ask/answers/012915/what-difference-between-inelasticityand-
elasticity demand.asp
https://www.sparknotes.com/economics/micro/elasticity/problems
https://www.investopedia.com/terms/l/law-of-supply-demand.asp
https://opentextbc.ca/principlesofeconomics/chapter/3-1-demand-supply-and-equilibrium-in
markets for-goods-and-services/
https://global.oup.com/us/companion.websites/9780199811786/student/chapt2/multiplech
https://opentextbc.ca/principlesofeconomics/chapter/5-1-price-elasticity-of-demand-and-price
elasticity-of-supply
http://faculty.fortlewis.edu/walker_d/practice_problems_-_elasticity.htm
https://www.economicsonline.co.uk/Competitive_markets/Price_elasticity_of_demand.html
https://redmontecon
https://global.oup.com/uk/orc/busecon/economics/gillespie_econ4e/student/mcqs/ch05/
https://study.com/academy/answer/if-a-20-decrease-in-the-price-of-long-distance-phone-
calls-leads;
https://int.search.myway.com/search/AJimage.jhtml

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Contact Number: (077)-771-3678
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WBLS-OBE MELC-Aligned Self-Learning Module Applied Economics 11/12 27