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JHS SHS: Laguna College of Business and Arts
JHS SHS: Laguna College of Business and Arts
JHS SHS: Laguna College of Business and Arts
SHS
JHS
Department
SHS
JHS
Department
DEFINITION OF TERMS:
MARKET- place where buyers and sellers meet
and trade
DEMAND- the willingness of the buyer or
consumer to pay for a certain good
SUPPLY- willingness to produce
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JHS
Department
SHS
JHS
Department
Quantity demanded the amount of goods and
services consumers are willing to purchase
given a certain price.
INVERSE RELATIONSHIP
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Department
B
related to its own price.
D 1 30 3
E 0 40
2 C
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JHS
Department
SHS
JHS
Department
rise y P P2 - P1
slope= run = = =
x Q Q 2 - Q1
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Department
where:
P1 and Q1 stand for initial price and
quantity of the product, respectively; and
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Department
Demand Function
QdX = f (PX )
Where:
P X = price of commodity X
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JHS
Department
Demand Equation
QdX = a- bPX
Where:
a = intercept
P X = slope
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Department
Example
QdX = 20- 0.4PX
Interpretation of the intercept and the slope
a = 20 The intercept means that if the price commodity
X is zero, the buyer will purchase 20 units of the
commodity.
b = -0.4 The slope means that for every one unit change
(either an increase or decrease) in the price of X,
the quantity demanded will change by 0.4 unit.
The negative sign indicates a negative (inverse)
relationship between the price of X and the
quantity demanded.
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JHS
Department
SHS
JHS
Department
SHS
JHS
Determinants Department
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JHS
Department
PRINCIPLES OF DIMINISHING MARGINAL
UTILITY
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Department
PRINCIPLES OF DIMINISHING MARGINAL
UTILITY
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Department
PRINCIPLES OF DIMINISHING MARGINAL
UTILITY
DEMAND CURVE
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JHS
MOVEMENT along the DEMAND CURVE Department
Price
P1 a
P2 b
D
0 Q1 Q2 Quantity
Laguna College of Business and Arts
APPLIED ECONOMICS
DEMAND CURVE
Price
P1 a m
P2 b n
D1 D 2
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Department
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LAWA OF SUPPLY
0 0
B It states that as the
4 price increases, the
1 10 E
C 2 20
quantity3supplied
30
also increases,
3
and D as the price
D
decreases,
E 4 the quantity
40 suppliedCalso decreases
2
(Ceteris Paribus)
B
1
A
10 20 30 40
QUANTITY
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JHS
Department
SHS
JHS
Department
rise y P P2 - P1
slope= run = = =
x Q Q 2 - Q1
SHS
JHS
Department
where:
P1 and Q1 stand for initial price and
quantity of the product, respectively; and
SHS
JHS
Department
Supply Function
Qs X = f (PX)
Where:
P X = price of commodity X
SHS
JHS
Department
Demand Equation
Qs X = a- bPX
Where:
a = intercept
P X = slope
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Department
Example
QsX = -10+ 0.6PX
Interpretation of the intercept and the slope
a = -10 The intercept means that if the price commodity
X is zero, the seller will sell -10 units of the
commodity. A negative quantity is nothing. This
only emphasizes that if there is no price, the
seller will sell nothing.
b = 0.6 The slope means that for every one unit change
in the price of X, the quantity supplied will
change by 0.6 unit.
The positive sign signifies a positive relationship
between the price and the quantity supplied.
SHS
JHS
Determinants Department
SHS
JHS
MOVEMENT along the SUPPLY CURVE Department
S
Price h
P2
g
P1
0 Q1 Q2 Quantity
Laguna College of Business and Arts
APPLIED ECONOMICS
DEMAND CURVE
g
P2
b
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Department
Reference