MICROECONOMICS

Group 1 | 10 Pascal
Bocato, Lyka Janine
Delgado, Kiara Venice
Romano, Robee
Chelagh
Remolano, Kimberly
Jan
Yap, Lady Hanna

MICROECONOMICS

\-E-K-N-MIKS, --K-\

noun; plural but usually singular in construction | mi-cro-eco-nomics

: the study of the economic decisions and actions of individual
people, companies, etc.
: deals with the behavior of individual economic units.
:deals with the economic behavior of individual economic agents
and of particular markets and industries.

DEMAND

CONCEPT OF DEMAND &

SUPPLY
SUPPLY

A shorthand way of describing the

behavior of buyers.

The rate at which consumers want to buy

a product.
Refers to both willingness and ability to
pay.

The behavior of sellers

It is not just the amount of something
there, but the willingness and ability of
potential sellers to produce and sell it.
It reflects the a decision about which
technologically feasible items to produce

Law of Supply states: when the price of a

good rises, and everything else remains
the same, the quantity of the good
supplied will also rise.

Law of Demand states: when a price of a

good rises, and everything else remains
the same, the quantity demanded will fall
short.
P Qd

P Qs

CETERIS PARIBUS
Ceteris Paribus means everything else remains the same
or other things equal.
In this context, it means that income, wealth, prices of
other goods, population, and preferences all remain fixed
NOTE: In the real world, things are rarely equal. Lots of
things tend to change at once. But this is not the fault of
the model, its a virtue. The whole point is trying to
discover the effects of something without being confused
nor distracted by other things.

FUNCTION OF DEMAND AT
SUPPLY
DEMAND

SUPPLY

Qd = a bP
Qd = quantity demanded
a = intercept ( bilang ng Qd
kung presyo ay 0)
b = slope
P = Price

Qs = c + bP
Qs = quantity supplied
c = intercept ( bilang ng Qs
kung presyo ay 0)
b = slope
P = Price

DEMAN
D-

SCHEDULE OF DEMAND AT
SUPPLY
Is a list showing the quantities of a good that
consumers would choose to purchase at
different prices, with all other variables are
held constant

SUPPLY-

Is a list showing the quantities of a good

or service that firms would choose to
produce and sell at different prices, with
all other variables are held constant

ENERGY
BARS

PRICE

QUANTITY
DEMANDED

ENERGY
BARS

PRICE

QUANTITY
SUPPLIED

50

45

35

10

13

25

12

15

18

15

17

20

CURVE OF DEMAND AT
SUPPLY
DEMAND

SUPPLY

Shows how much of a good consumers

are willing to buy as the price per unit
changes.
It shows graphically the quantity of the
good demanded at each price, with other
factors that affect quantity demanded
held constant.
It is typically downward-slopping
a graphical representation of the
relationship between price and quantity
demanded (ceteris paribus).
It is a curve or line, each point of which is
a priceQd pair. That point shows the
amount of the good buyers would choose

shows the quantity of a good that

producers are willing to sell at a given
price.
It shows graphically the quantity of a
good supplied at each price, with other
factors that affect quantity supplied held
constant.
It is typically upward-slopping.
a graphical representation of the
relationship between price and quantity
supplied (ceteris paribus).
It is a curve or line, each point of which is
a price-Qs pair. That point shows the
amount of the good sellers would choose

SUPPLY CURVE

DEMAND CURVE
20

18

18

16

16

14

14

12

12

10

Price (in pesos) 10

PRICE (IN PESOS)

2
0

15

0
25

35

Quantitiy Demanded

45

50

10

Quantity Supplied

15

20

SHIFTING OF THE DEMAND

CURVE

SHIFT IN THE DEMAND

CURVE
When we move along the demand curve, we call it change in
quantity demanded. A change in quantity demanded is always
caused by a change in the goods price.
But when the entire demand curve shifts, we call it change in
demand. A change in demand is always caused by a change of
something other than the goods price
At TABLE 1 and FIGURE 1, it is seen how an increase in income
would increase the demand in maple syrup. And while income
and wealth are different things, they have the similar effects in
demand.

SHIFT IN THE DEMAND

CURVE

SHIFT IN THE DEMAND

CURVE

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FACTORS THAT CAN AFFECT THE

DEMAND

er
um e s
ns ast
Co t
s

PRICES OF RELATED
GOODS
The quantity demanded of any particular good will be
affected by changes in the prices off related goods.
Changes in the prices of alternative foods such as beef
and chicken will affect the quantity of fish demanded, for
instance.
An increase in the price of chicken causes some
consumers to eat fish more often and chicken less often
than before; they substitute fish for chicken in their diets.
This means that at any price of fish, the quantity of fish
demanded increases.

CONSUMERS INCOMES
When a consumers income rises, he will typically want to
spend more. He will demand more of most but not all
goods.
When income increases, consumers buy more of most
goods and the demand curve shifts rightward.

CONSUMERS TASTE
Consumers Taste or preferences are a major
determining the quantity of any good demanded.

factor

Consumers preferences are shaped in part by society, habit,

education, and advertising.
For instance, the quantity of haircuts demanded is
determined in part by social conventions about how long
hair should be worn.
Habits and conventions typically change quite slowly.
Fashions may change rapidly. Whatever the reason, when
consumers tastes or preferences for any good change, the

EXPECTED FUTURE PRICES

The quantity of a good demanded within any given period depends not
only on prices in that period but also on prices expected in future periods.
For instance, the quantity of cars demanded this month will be higher at
any given price if car prices are expected to rise next month. Similarly,
the quantity of cars demanded this month depends also on the prices
consumers expect to pay for gasoline in the future. If gasoline prices are
expected to be much higher in the future, the quantity of cars demanded
at any given price this month will be lower that it would be if gas prices
were not expected to rise.
This will also affect quantities demanded in the current period. If people
believe their incomes will rise in the near future, they will increase the
quantity of goods they want to buy at any given price this period.

POPULATION
As the population increases in the area, the number of
buyers will ordinarily increase as well, and the demand of
a good will also increase.
The larger the population, the greater the demand for all
goods.
For instance, the growth of the Quezon City population
over the past 10 years, has been an important reason for
rightward shifts in the demand curves of food, rental
apartments, telephones, and many other goods and
services.

EXPECTED FUTURE INCOME

AND CREDIT
When expected future income increases or when
credit is easy to obtain, the demand might
increase now.

SHIFTING OF THE DEMAND

CURVE
FIGURE 3, 4, 5 summarizes the important factors that affect
the demand
side of the market, and how their effects are represented with a demand
curve.

SHIFTING OF THE DEMAND

CURVE
FIGURE 3, 4, 5 summarizes the important factors that affect the
demand side of the market, and how their effects are represented
with a demand curve.

SHIFTING OF THE SUPPLY

CURVE

SHIFT IN THE SUPPLY

CURVE
Sellers choices on how much to sell are affected by many
different variables. One of these variables the price of
good causes sellers to move along the supply curve. The
other variables cause the entire supply curve to shift.
Take a look at FIGURE 6 and TABLE 2, if the workers wages
fell to $7 per hour, then there would be a sudden change
in the number of bottles to be sold at the same price. This
shows that the entire relationship between the price and
quantity supplied has changed.

FACTORS THAT CAN AFFECT THE

SUPPLY
Durable
producti
ve
assets

Available
Technolog
y

Available
Technolog
y

Prices of
variable
inputs

Productiv
e
Capacity
Profitabilit
y of
Alternate
Goods

DURABLE PRODUCTIVE
ASSETS
Supply curves are often drawn taking as given the durable
productive assets or physical capital owned by sellers of the
good.
These include such things as fishing boats, stores, assembly
lines, delivery trucks, computers, and printing presses. The more
physical capital sellers own, all else equal, the greater the
quantity supplied at any price level.
This is often taken as given because it usually takes some time
to adjust productive inputs such as the number of fishing boats.

AVAILABLE TECHNOLOGY
This is the set of known techniques or methods fr producing any
particular good or service.
Any improvement in technology that makes it possible to produce
and market a given quantity of a good more cheaply will tend to
increase the quantity supplied of that good at any price.
For instance, the introduction of new sonar equipment makes it
easier to track fish and therefore increases the catch of each boat.
Firms will be willing to sell more fish at any given price since they
can land that quantity of fish at a lower cost than they could
before.

PRICES OF VARIABLE
INPUTS
This affects production cost and therefore the quantity of output
firms are willing to supply at each price.
A change in any input cost, including the cost of labor or of fishing
boats, will shift the supply curve if the quantity of that input can be
varied.
If labor becomes cheaper, the cost of supplying any given quantity
of fish falls and firms will hire more labor and increase the quantity
of fish supplied at every price.
If the cost of fishing boats falls, the quantity of fish supplied will
increase in the long run, when the number of boats can also be
increased

PROFITABILITY OF ALTERNATE
GOODS
Many firms can switch their production rather easily
among several different goods and services, all of which
require more or less the same inputs.
When an alternate good becomes more profitable to
produce because its price rises, or the cost of producing
it falls the supply curve for the good in question will
shift leftward.

EXPECTATION OF FUTURE
PRICES
A rise in the expected price of a good will
decrease supply, shifting the supply curve
leftward.

SHIFTING IN THE SUPPLY

FIGURES 7, 8, 9 summarizes the different CURVE
variables that
change the supply of a good and the shift of the supply
curve

SHIFTING IN THE SUPPLY

FIGURES 7, 8, 9 summarizes the different CURVE
variables that
change the supply of a good and the shift of the supply
curve

PRICE ELASTICITY

ELASTICITY

refers to the degree of responsiveness of one variable to another. It's not

enough to say, for instance, that a rise in price leads to a fall in quantity
demanded (the Law of Demand); we want to know how much quantity
changes in response to price.

A simple way to see the degree of responsiveness is simply to look at the

slope. A flatter demand curve represents a greater degree of responsiveness
(for a supply or demand curve), as shown in the above graphs: the flatter
demand curve produces a larger change in quantity for the same change in
price.

ELASTICITY
PRICE ELASTICITY OF DEMAND

the percentage change in quantity

demanded divided by the percentage
change in price.
A measure of responsiveness of the
quantity of a good demanded to a
change in its price.
The percentage in quantity demanded of
a good produced by a 1 percent change
in its price, holding constant all other
factors that affect quantity demanded.
The larger the price elasticity of demand,
the more responsive quantity demanded
is to changes in price and the more
elastic demand is said to be.

PRICE ELASTICITY OF SUPPLY

the percentage change in quantity
supplied divided by the percentage
change in price.
A measure of responsiveness of the
quantity of a good supplied to a change
in its price.
The percentage in quantity supplied of a
good produced by a 1 percent change in
its price, holding constant all other
factors that affect quantity supplied.

PRICE ELASTICITY OF DEMAND

When Ed > 1, it is elastic

When Ed < 1, it is inelastic
When Ed = 1, it is unit - elastic

PRICE ELASTICITY OF SUPPLY

FORMULA:

=
=
=

When Es = 0, it is said to be perfectly

inelastic
When Es = infinite, it is said to be
perfectly elastic

URI NG ELASTISIDAD

ELASTIC
Ang demand ay masasabing price elastic kapag mas malaki ang naging
bahagdan ng pagtugon ng quantity demanded kaysa sa bahagdan ng
pagbabago ng presyo. Sa maliit na bahagdan ng pagbabago sa presyo,
ang mga mamimili ay nagiging sensitibo sa pagbili. Halimbawa, ang
price elasticity of demand ay 1.2. Ibig sabihin, sa bawat isang bahagdan
ng pagbabago sa presyo ay may katumbas na 1.2 na bahagdan ng
pagbabago ng quantity demanded. Ang pagiging sensitibo ng quantity
demanded sa pagbabago ng presyo ay maaring ipaliwanag ng
sumusunod:
a. Maaaring marami ang substitute sa isang produkto.
b. Ang mga produkto ay hindi pinaglalaanan ng malaki sa badyet
sapagkat hindi naman ito masyadong kailangan.

INELASTIC
Ang demand ay masasabing price inelastic kapag mas maliit ang naging
bahagdan ng pagbabago ng quantity demanded kaysa sa bahagdan
pagbabago ng presyo. Ipinahihiwatig nito na kahit malaki ang bahagdan
ng pagbabago sa presyo, ang mga mamimili ay hindi sensitibo sa
pagbili. Halimbawa, ang price elasticity of demand ay 0.5. Ibig sabihin,
sa bawat isang bahagdan ng pagbabago sa presyo ay may katumbas na
0.5 na bahagdan ng pagbabago ng quantity demanded. Ang hindi
pagiging sensitibo ng quantity demanded sa pagbabago ng presyo ay
maaaring ipaliwanag ng sumusunod:
a. Halos walang malapit na substitute sa isang produkto.
b. Ang produkto ay pangunahing pangangailangan.

UNITARY O UNIT ELASTICITY

Pareho ang bahagdan ng pagbabago ng presyo sa
bahagdan ng pagbabago ng quantity demanded.

PERFECTLY ELASTIC
Nangangahulugan ito na anumang pagbabago sa presyo ay
magdudulot ng infinite na pagbabago sa quantity demanded.
Ipinapakita rito na sa iisang presyo, ang demanded ay hindi
matanto o mabilang

PERFECTLY INELASTIC
Nangangahulugan ito na ang quantity demanded ay hindi
tumutugon sa pagbabago ng presyo. Ang produktong ito ay
lubhang napakahalaga na kahit anong presyo ay bibilhin pa
rin ang kaparehong dami.

INTERAKSYO NG DEMAND AT
SUPPLY

ANO ANG PAMILIHAN?

Ito ay isang mekanismo kung
saan ang mamimili at
nagbebenta ay nagkakaroon ng
transaksiyon upang magkaroon
ng bentahan.
Ito rin ang nagsasaayos ng
nagtutunggaliang interes ng
mamimili at bahay kalakal.

PUWERSA NG PAMILIHAN
(MARKET FORCES)
Tumutukoy sa ugnayan ng supply at demand.
Ang mamimili ay bumibili nang marami sa mababang
presyo samantalang marami namang ipinagbibili ang
bahay-kalakal sa mataas na presyo.
Nag-uugnayan ang mamimili at bahay-kalakal sa
pamamagitan ng pagtatakda ng presyo.

MATH EQUATION AND SCHEDULE OF

THE INTERACTION OF DEMAND AND
SUPPLY
DEMAND
SUPPLY
QUANTITY DEMANDED=Equilibrium Price =QUANTITY SUPPLIED
Qd = a bP is equal with Qs = c + bP
Earrings

Price

Quantity
Demanded

Quantity
Supplied

Shortage/Su
rplus

10.00

900 a day

300 a day

-600

20.00

600 a day

600 a day

30.00

300 a day

900 a day

+600

UGNAYAN NG KURBA NG
SUPLAY AT DEMAND

PAGGALAW NG EQUILIBRIUM
Shortage- Mas mataas ang quantity demanded kasya
quantity supplied.
Para mawasto:
1. Pagtataas ng presyo sa mga produkto.
2. Pagbili ng mga mamimili sa mataas na presyo ng produkto.

PAGGALAW NG
EQUILIBRIUM
Surplus- Mas mababa ang quantity demanded kaysa
quantity supplied.
Para mawasto:
1. Pagbababa ng presyo upang umakit ng mga mamimili.
2.

Paghingi ng diskuwento sa presyo ng produkto.

PAGTATAKDA NG BATAS SA
PRESYO NG KALAKAL

Kung minsan, itinatakda ng pamahalaan ang presyo ng

kalakal upang maiwasan ang pang-aabuso sa panig ng
nagtitinda o ng mamimili.
Price Ceiling ang pinakamataas na presyo na maaring
ibenta ang produkto.
Price Flooring ang pinamababang presyo na maaring
ibenta ang produkto.

EPEKTO NG PAGKAKAROON NG
PRICE
Mabuti: CEILING
Mababang presyo ng mga bilihin.
Kasiguruhan sa mga mamimili.
Di-mabuti:
Pagbaba ng Supply
Nagiging dahilan ng Kakulangan
Nagiging dahilan ng pagkakaroon ng mga ilegal na
pamilihan (black market)

EPEKTO NG PAGKAKAROON NG
PRICE
FLOOR
Mabuti:
Mas mataas na sahod sa mga manggagawa
Mas malaking tubo sa mga nagtitinda
Di-mabuti:
Mas mataas na presyo ng bilihin
Maaring maging dahilan ng kalabisan ng kalakal.
Mas mababang demand ng mga bilihin

MGA KAGANAPAN AT
PAGBABAGO SA PAMILIHAN

PAGTAAS NG DEMAND
Ano ang mangyayari sa pamilihan kung ang demand at suplay
ay magbago?
Maaaring tumaas ang demand nang hindi nagbabago ang
suplay ng isang produkto
Tataas ang demand dahil mas maraming mabibili ang
konsyumer sa mataas na kita.
Ceteris Paribus ang kurba ng demand ay gagalaw
PAKANAN.

PAGTAAS NG DEMAND

Y-axis: presyo
Dating Ekwilibriyong Presyo = P15
Bagong E. Dami = 13
X-axis: dami ng produkto Bagong Ekwilibriyong Presyo = P18 Dating
E.Dami = 9

PAGTAAS NG SUPLAY
Maaaring tumaas ang suplay nang hindi nagbabago ang
demand ng isang produkto.
Ceteris Paribus, ang kurba ng suplay ay gagalaw
PAKANAN.
Tataas ang suplay dahil mas maraming nalilikhang
produkto.

PAGTAAS NG SUPLAY

Dating Ekwilibriyong Presyo = P15

Dating Ekwilibriyong Dami
=9
Bagong Ekwilibriyong Presyo = P12.50 Bagong Ekwilibriyong

PAGBABA NG DEMAND
Ano ang maaaring mangyari sa pagbaba ng demand?
Bababa ang demand dahil mas kakaunti ang mabibili
ng konsyumer sa mababang kita
Ang kurba ng demand ay gagalaw PAKALIWA.

PAGBABA NG DEMAND

Y-axis: presyo
Dating Ekwilibriyo Presyo = P18
Bagong E. Dami = 9
X-axis: dami ng produkto Bagong Ekwilibriyo Presyo = P15

PAGBABA NG SUPLAY
Kapag mataas ang presyo, bababa ang demand ng isang produkto

PAGBABA NG SUPLAY

Bagong Ekwilibriyong Presyo = P15

Ekwilibriyong Dami = 9
Dating Ekwilibriyong Presyo = P12.50

Bagong
Dating Ekwilibriyong

SUMMARY
Kapag tumaas ang demand ng produkto at hindi nagbago ang suplay,
tataas ang ekwilibriyong presyo at and ekwilibriyong dami ng bilihin.
Kapag tumaas ang suplay athindi nagbago ang demand, bababa ang
ekwilibriyong presyo at tataas naman ang ekwilibriyong dami ng bilihin.
Kapag bumaba ang demand at hindi nagbago ang suplay, bababa ang
ekwilibriyo ng presyo at ang ekwilibriyong dami ng bilihin.
Kapag bumaba ang suplay at hindi nagbago ang demand, tataas ang
ekwilibriyo ng presyo at bababa naman ang ekwilibriyo ng dami ng
bilihin.