BAC101: Basic Microeconomics

Module no.: 4
Module Title: The Supply and Demand Analysis

Writer: Adrian Z. de Lumen, LPT, MM

Opening prayer:

Heavenly Father,

Thank you for the talents and gifts you have given me and for the
opportunity of education. As we begin this module, Lord, please open my
eyes to new learnings. I pray for wisdom as I engage to learn through this
module for clear mind as I read and view the materials I pray that the
knowledge I may gain here will transform my heart and mind to follow you
more and be of service to my fellowmen.

May you be glorified, Lord. We ask this in the name of Jesus Christ our
Lord through the intercession of Saint Dominic De Guzman, and Saint
Thomas Aquinas.
Amen.

Topic 4: Consumer choice

MODULE INTRODUCTION AND FOCUS QUESTIONS:
We already know the two important players inside the market. We have
the producer and the consumer. Consumer is the most familiar player to us
since we are all a consumer of a product and service. But do we really
understand what is our role inside the market? How do we make our

Adrian Z. de Lumen
Instructor, GE3
adriandelumen@gmail.com / 09198144813
 BAC101: Basic Microeconomics

decision on which and where to buy our needs? Also, with our limited
resources, we must consider how much quantity do we need to purchase
only. With those questions, what are the things we need to consider in
buying?

MODULE LESSONS AND COVERAGE:

This module has the following coverage:

Lesson Topics I should be able Estimated time
to …
Subtopic 1 The needs  Identify the 2 hrs
(products) needs of
consumer
according to its
classification. (A)
 Differentiat
e the different
needs of
consumer
(Maslow’s
hierarchy of
needs) (M)
Subtopic 2 Utility Theory  Apply the law of 2 hrs
diminishing
marginal utility
in real life. (T)
 Identify what is
equilibrium
market basket.
(A)
 Analyze the
importance of
Equilibrium

Adrian Z. de Lumen
Instructor, GE3
adriandelumen@gmail.com / 09198144813
 BAC101: Basic Microeconomics

Market basket.
(M)
Subtopic 3 Budget Line  Analyze the 2 hrs
importance of
Budget line in
consumer choice
or behavior. (M)

Here is a simple map of the above lessons you will cover:

Reminder: To do well in this module, you need to remember and do

the following:

1. Open the indicated website if there is any.

2. Take down notes and copy some important link so that you could go
back whenever you need information given in that site.
3. Review videos/articles as many times as needed
4. Make your google classroom account and enrol yourself to (section to
follow). Make sure to use your complete name as username.
5. All activities, exercises, and pre and post assessment must be answered
and compiled in 1 document (Please see separate document or
answer sheet). Your compilation must be submitted within a week after
receipt of this module in google classroom.

Adrian Z. de Lumen
Instructor, GE3
adriandelumen@gmail.com / 09198144813
 BAC101: Basic Microeconomics

6. Pls. contact your instructor if there is any confusion thru this phone
number 09198144813 or thru facebook messenger with this link
https://web.facebook.com/adrian.delumen.

PRE-ASSESSMENT:
Let’s find out how much you already know about this module.

Multiple choice: Write the letter that corresponds to your answer on the
space provided for.

A. 1. The one who demands goods and services.

a. Consumer b. Seller
c. Producer d. Entrepreneur
C 2. Tangible product.
a. Consumer b. Producer c. Goods d. Services
D 3. Intangible product.
a. Consumer b. Producer c. Goods d. Services
C 4. The most basic needs in Maslow’s hierarchy.
a. Esteem needs b. Social needs c. Physiological
d. Safety & Security
A 5. The amount of satisfaction a person gets from consuming a
product.
a. Utility b. Utils c. Budget d. Needs

This pre-assessment was just to make you more curious about important
concepts about utility maximization of consumers. To correct our
misconceptions in the topic let us explore below.

Study: Let us explore below.

Adrian Z. de Lumen
Instructor, GE3
adriandelumen@gmail.com / 09198144813
 BAC101: Basic Microeconomics

Activity 1: For online and offline students: Identify your consumption

limit for a particular product by encircling the number of quantity.

Product Quantity
3

1 2 4 5 6 7 8 9 10

6
1 2 3 4 5 7 8 9 10

1 3 4 5 6 7 8 9 10

5
1 2 3 4 6 7 8 9 10

3
1 2 4 5 6 7 8 9 10

Process questions: Explain briefly.

1. Among those products, what is your highest consumption and why?
My highest consumption product is the Pizza because it is my favorite
food and it is delicious.
2. Do you think you can have all of them at once at the quantity of 10?
Why or why not?
I think I cannot have them all at once at the quantity of 10 because
it will make me full and It will make me “Maaumay”.
3. Are you willing to buy those all at once for yourself? Why or why not?
No, I am not willing to purchase those items all at once for myself since I
will not be able to consume all of the products provided/ and "maaumay
ako".

Adrian Z. de Lumen
Instructor, GE3
adriandelumen@gmail.com / 09198144813
 BAC101: Basic Microeconomics

The objective of the activity was not to make you hungry  but to show
you the initial concept of utility or satisfaction of a consumer towards
several products. Though we enjoy things a lot, but there will come a time
that we may feel too much dose of those products. It let us also see the
limit of our resources. We cannot have it all at once. That is why we need
to utilize our resources properly guided by some consumer factors that will
be discussed on the next phase.
End of STUDY:
Your understanding about us consumer will be increased as you study the
lessons and perform the activities in the RESEARCH phase.

Research: Let us firm up your understanding!

Your main goal in this section is to learn and understand some key
concepts by working on the following questions:
 What are the factors to consider in purchasing product?
 When do we stop consuming a certain product?
 How do we prioritize our needs?

Also, you will learn and understand the concept of budget line where it
technically limits you from over spending.
Activity No. 2:
You have to watch the video first to understand the concept of
consumer satisfaction. After internalizing the video, try to answer the
process questions below.

For online students: Please press control + click the image below for the
linked offline video. (If it does not work, open the video manually: “Module
4 - Activity2 Video - The Law of Diminishing Marginal Utility Explained in
One Minute- From Definition to Examples”)

Adrian Z. de Lumen
Instructor, GE3
adriandelumen@gmail.com / 09198144813
 BAC101: Basic Microeconomics

For online students: https://www.youtube.com/watch?v=YhqqWKw_OGs

(If the link does not work by clicking, copy and paste it to a web browser)
Process task: Explain briefly.
1. Why do you think we consumers tend to decrease our satisfaction as
we consume more of the same product?
We consumers tend to decrease our satisfaction as we consume more of
the same product because we reached our satisfaction max level

2. Do you think it is advisable for us to still consume that product even

we no longer get satisfied? Why?
I think it is a No, it is not advisable for us to still consume that
product that we no longer get satisfied because we already reached
our satisfaction max level and by consuming it more we are not
getting satisfied anymore so it’s like a lost for us if we tend to
consume that product even if we are no longer get satisfied.

Important concepts:

Consumer
-one who demands goods and services.

Adrian Z. de Lumen
Instructor, GE3
adriandelumen@gmail.com / 09198144813
 BAC101: Basic Microeconomics

CONSUMER SOVEREIGNTY
-consumers’ power to determine what is produced since they are the
ultimate purchasers of goods and services

Continue reading. . . . . . (control + click the link)

(If the link does not work, open the file manually: “Reading Material 4-
consumers-choice Part1”)

After reading the important concepts, try the exercises below.

Try it 
Exercise No. 1: Match the correct level with the letter of the need.

A. Physiological Need
B. Safety & Security Need
C. Social Need
D. Esteem Need
E. Self-Actualization Need

A 1. I’m starving.
B 2. Please lock the door.
B 3. I hope I won’t get fired for that mistake.
E 4. I will succeed with that new program.
C 5. I wish they would invite me to go to lunch.
D 6. I want to chair that committee.
C 7. Those people in that office are just mean.
D 8. I hope they think my idea was good.
E 9. I know I can be class president.
A 10. I’m exhausted.

Exercise no.2: Complete the table below.

Adrian Z. de Lumen
Instructor, GE3
adriandelumen@gmail.com / 09198144813
 BAC101: Basic Microeconomics

Unit of
Marginal Utility Total Utility
Consumption

1 1. - 20
2 15 2. 35
3 3. 10 45
4 4. 5 50
5 00 5. 50
6 6. -5 45
7 7. 10 35
8 8. 15 20
9 -20 9. 00
10 -25 10. -25

Exercise no.3: Use the table below to find the highest possible marginal
utility. How many per product you will consume by
maximizing your Php 500 budget to get the optimal
satisfaction out of the two products.

Pesos worth

Product 100 200 300 400 500

Marginal Utility (utils)

Pizza 35 31 26 20 13
Fries 27 25 22 18 13

Adrian Z. de Lumen
Instructor, GE3
adriandelumen@gmail.com / 09198144813
 BAC101: Basic Microeconomics

End of RESEARCH:
In this section, the discussion was about the concepts of diminishing
marginal utility and consumer choice maximization. To be able to
understand a consumer, the needs must be explicitly understood as
priorities in purchasing. Thus, consumer satisfaction may increase for a
moment until it reaches the peak where any additional consumption of the
same product may lead to decrease the satisfaction because we are
already get used to it (na sasawa). In other words, yes consumer wants
more of a product but it doesn’t give us the same amount of satisfaction
like from our 1st consumption. After you have gone into this section, have
you answered the question, “What affects our decision as consumer
inside the market?”

Now that you know the important ideas about this topic, let’s go deeper by
moving on to the next section.

Analyze: Deepen your acquired knowledge!

Your goal in this section is to take a closer look at some aspects of the
topic like the significance of budget line to consumer behavior.

In the next activity you will watch a video on YouTube that will deepen
your understanding on what are the limiting factors to consumer behavior
inside the market.

Activity no. 3: Video processing

1. For online students:

https://www.youtube.com/watch?v=v1q1nnPCcKw
(If the link does not work by clicking, copy and paste it to a web browser)

2. For offline students: Press control + click the images below for the
linked offline videos. (If it does not work, open the video manually:”

Adrian Z. de Lumen
Instructor, GE3
adriandelumen@gmail.com / 09198144813
 BAC101: Basic Microeconomics

Module 4 - Activity3 Video - The importance of studying consumer

behavior”)

Continue deepening your understanding. . . (control + click the link)

(If the link does not work, open the file manually: “Reading Material 4-
consumers-choice Part2”)

Process question: Pls. answer briefly

1. What is the purpose of budget in consumer behavior?
The purpose of a budget in consumer behavior is to determine whether
or not a consumer's demands or needs are within their budget and to
assist them in purchasing a product in line with their budget line.

2. Is it important to always consider your budget line?

Yes, it is important to always consider our budget line because we
need discipline in satisfying our needs. When purchasing products,
we must consider our budget line and the pricing of the products to
ensure that we are purchasing the items that we require the most
and we shall not be lacking in anything.

Adrian Z. de Lumen
Instructor, GE3
adriandelumen@gmail.com / 09198144813
 BAC101: Basic Microeconomics

End of ANALSIS
Now that you have a deeper understanding of the topic, you are ready to
do the tasks in the next section.

Action: Apply your learnings in the society!

Activity number 4: Performance task

Today’s pandemic has caused global recession. Thus, many Filipinos are
being resourceful in order to live like online selling. Let say you are an
online seller of any kind of food, you are tasked to pair with your classmate
to be your respondent in making a law of marginal utility sample.
Supplement your sample by explaining and relating your actual data to the
diminishing marginal utility. Do your performance task by supplying all the
needed data using the guide below. Your work will be evaluated based on
the required element and conclusion for the explanation.

Guide: Supply all the required elements.

Your Rate of satisfaction for every consumption (0-100%)
produc
1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th
t

Note: Interview any of your classmates/friends as your buyer of your

product. Given the chance to consume 10 quantities of your products, let
him/her rate his/her satisfaction for every consumption from the scale of
0% to 100%. 0% as the lowest and 100% as the highest. Then explain at
what quantity your buyer must stop consuming according to the law?

My buyer is my classmate “Hyacinth Agao”. She consumed up to the 4 th

consumption because she is already full and she doesn’t want to eat
because she is already use to it “nagsasawa na”

Rubric for the graphic organizer

Adrian Z. de Lumen
Instructor, GE3
adriandelumen@gmail.com / 09198144813
 BAC101: Basic Microeconomics

4 3 2 1
Excellent Satisfactory Developing Needs
improvement
Required The model All required All but 1 of Several
element includes all elements are the required required
required included on elements are elements
elements as the model. included on were missing.
well as the model.
additional
information.
Conclusion The The One of the More than
conclusion is conclusion is previously one of the
relevant and strong, ties described previously
strong on the the paper aspects of mentioned
current together and the aspects of
setting, leaves the conclusion is the
realistically reader lacking. conclusion is
ties the feeling they lacking.
paper understand
together and what the
leaves the writer was
reader getting at.
feeling they
understand
what the
writer was
getting at.

CLOSURE:

Before closing module 4, as part of conclusion let us clarify that consumer

has the power to dictate what product must be inside the market according
to his needs as priority. With this, consumer has the choice to choose
among several kinds of goods and services according to his budget,
preference, and what will maximize his satisfaction out of that product.

Adrian Z. de Lumen
Instructor, GE3
adriandelumen@gmail.com / 09198144813
 BAC101: Basic Microeconomics

SELF REFLECTION: Kindly put a check on your honest response given

the learning skill.
Learning With confidence Not sure though A little bit
outcomes confused
 Identify the
needs of
consumer
according to its
classification.
(A)
 Differentiate the
different needs
of consumer
(Maslow’s
hierarchy of
needs) (M)
 Apply the law
of diminishing
marginal utility
in real life. (T)
 Identify what is
equilibrium
market basket.
(A)
 Analyze the
importance of
Equilibrium
Market basket.
(M)
 Analyze the
importance of
Budget line in
consumer
choice or

Adrian Z. de Lumen
Instructor, GE3
adriandelumen@gmail.com / 09198144813
 BAC101: Basic Microeconomics

behavior. (M)

Before you go to the post test, assess yourself using the self-reflection if
you are ready, if not you may reach me via messenger or sms for your
queries.

POST-ASSESSMENT:
It’s now time to evaluate your learning.

I. Multiple choice: Write the letter that corresponds to your answer on the
space provided for.

A 1. The one who demands goods and services.

a. Consumer b. Seller c. Producer d.
Entrepreneur
C 2. Tangible product.
a. Consumer b. Producer c. Goods d. Services
D 3. Intangible product.
a. Consumer b. Producer c. Goods d. Services
C 4. The most basic needs in Maslow’s hierarchy.
a. Esteem needs b. Social needs c. Physiological
d. Safety & Security
A 5. The amount of satisfaction a person gets from consuming a
product.
a. Utility b. Utils c. Budget d. Needs

Summative Assessment
I. True or False: Write “T” if the statement is true and “F” if it is false.
T 1. Consumer sovereignty is the power to determine what is inside the
market.
T 2. Goods and services are considered product.
T 3. We must maximize our satisfaction to utilize our resources properly.
T 4. Budget is one consideration in deciding inside the market.

Adrian Z. de Lumen
Instructor, GE3
adriandelumen@gmail.com / 09198144813
 BAC101: Basic Microeconomics

F 5. Needs are the same with wants.

II. Application: Complete the table below

Unit of
Marginal Utility Total Utility
Consumption

1 1. - 85
2 79 2. 164
3 3. 73 237
4 4. 66 303
5 58 5. 361
6 6. 49 410
7 7. 39 449
8 8. 27 476
9 14 9.490
10 0 10. 490

III. Use the table below to find the highest possible marginal utility. How
many per product you will consume by maximizing your Php
500 budget to get the optimal satisfaction out of the two
products.

Pesos worth

Product 100 200 300 400 500

Marginal Utility (utils)

Milktea 72 70 67 63 58
Fries 85 81 76 70 63

Adrian Z. de Lumen
Instructor, GE3
adriandelumen@gmail.com / 09198144813
 BAC101: Basic Microeconomics

Congratulations! You are done with Module 4. 

Closing prayer:

Dear Lord,

I have invested a great deal in this module with honest and noble
intentions. I have made sacrifices as you have made sacrifices for us. I
have used the gifts you have given me, remained steadfast and focused,
and have put my heart and soul into this module. I pray for intercession
and honest reward through Jesus Christ, whom all good things come from.
Amen.

Adrian Z. de Lumen
Instructor, GE3
adriandelumen@gmail.com / 09198144813
 BAC101: Basic Microeconomics

Sources:
- Slavin, S.L., (2009). Microeconomics 9th Edition. NY: McGraw Hill
Companies

Adrian Z. de Lumen
Instructor, GE3
adriandelumen@gmail.com / 09198144813