A LYS I S O F s u p p l y, d em a n d

BA S IC A N
a n d e qu i l i b r i u m
2023
OBJECTIVES:

AFTER COMPLETING THIS LESSON, YOU WILL BE ABLE TO:

• Understand the concept of market demand, market supply and market equilibrium
• State the Laws of demand and supply
• Construct and analyze demand, supply and their curves
• Solve problems on demand, supply and equilibrium
 Economics helps us solve the problem on excess supply and excess demand, and lead
it to a balanced supply and demand. In our needs, we do not want over supply. I actualt
means wastage of income. For entrepreneurs, it is not efficient if their stocks or supplies
are greater than the actual demand. It is a loss not revenue.
In economics, there are terms that you must learn to understand the better market
situations. A demand or the amount of good or service consumers are willing to purchase
at each price. Price is what buyer pays for a unit of the specific good or service. The total
number of units purchased at that price is called quantity demanded.
 The law of supply and demand explains the interactions
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 supply demonstrates the quantities that will be sold at a given price.

The higher the price, the higher the quantity supplied and
Vice versa.
Producers supply more at a higher price because selling at higher quantity at a
higher price increases revenue.
 FACTORS AFFECTING SUPPLY
a. Production capacity,
b. Production costs such as labor and materials
c. The number of competitors
d. Ancillary factors such as
e. Material availability,
f. Weather, and
g. Reliability of supply chain
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.
THE LAW O F D E M A N D
SUMMARY