SENIOR HIGH SCHOOL Applied Economics Market Demand Self-Learning Module 7 666 Quarter 3

Applied Economics Quarter 3 – Self-Learning Module 7: Market Demand First Edition, 2020 Republic Act
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ownership over them. Published by the Department of Education - Schools Division of Pasig City Printed
in the Philippines by Department of Education – Schools Division of Pasig City Development Team of the
Self-Learning Module Writer: Emmanuel B. Penetrante Editor: Dr. Edna D. Camarao Reviewers:
Content/Language: Hedelita B. Calonia Technical: Emmanuel B. Penetrante Illustrator: Name Layout
Artist: Name Management Team: Ma. Evalou Concepcion A. Agustin OIC-Schools Division
Superintendent Aurelio G. Alfonso EdD OIC-Assistant Schools Division Superintendent Victor M. Javeña
EdD Chief, School Governance and Operations Division and OIC-Chief, Curriculum Implementation
Division Education Program Supervisors Librada L. Agon EdD (EPP/TLE/TVL/TVE) Liza A. Alvarez
(Science/STEM/SSP) Bernard R. Balitao (AP/HUMSS) Joselito E. Calios (English/SPFL/GAS) Norlyn D.
Conde EdD (MAPEH/SPA/SPS/HOPE/A&D/Sports) Wilma Q. Del Rosario (LRMS/ADM) Ma. Teresita E.
Herrera EdD (Filipino/GAS/Piling Larang) Perlita M. Ignacio PhD (EsP) Dulce O. Santos PhD
(Kindergarten/MTB-MLE) Teresita P. Tagulao EdD (Mathematics/ABM) Applied Economics SENIOR HIGH
SCHOOL Market Demand Quarter 3 Self-Learning Module 7 Introductory Message For the facilitator:
Welcome to the Senior High School – Applied Economics Self Learning Module on Market Demand! This
Self-Learning Module was collaboratively designed, developed and reviewed by educators from the
Schools Division Office of Pasig City headed by its Officer-in-Charge Schools Division Superintendent, Ma.
Evalou Concepcion A. Agustin, in partnership with the City Government of Pasig through its mayor,
Honorable Victor Ma. Regis N. Sotto. The writers utilized the standards set by the K to 12 Curriculum
using the Most Essential Learning Competencies (MELC) in developing this instructional resource. This
learning material hopes to engage the learners in guided and independent learning activities at their
own pace and time. Further, this also aims to help learners acquire the needed 21st century skills
especially the 5 Cs, namely: Communication, Collaboration, Creativity, Critical Thinking, and Character
while taking into consideration their needs and circumstances. In addition to the material in the main
text, you will also see this box in the body of the module: As a facilitator you are expected to orient the
learners on how to use this module. You also need to keep track of the learners' progress while allowing
them to manage their own learning. Moreover, you are expected to encourage and assist the learners as
they do the tasks included in the module. Notes to the Teacher This contains helpful tips or strategies
that will help you in guiding the learners. For the learner: Welcome to the Applied Economics Self
Learning Module on Market Demand! This module was designed to provide you with fun and
meaningful opportunities for guided and independent learning at your own pace and time. You will be
enabled to process the contents of the learning material while being an active learner. This module has
the following parts and corresponding icons: Expectations - This points to the set of knowledge and skills
that you will learn after completing the module. Pretest - This measures your prior knowledge about the
lesson at hand. Recap - This part of the module provides a review of concepts and skills that you already
know about a previous lesson. Lesson - This section discusses the topic in the module. Activities - This is
a set of activities that you need to perform. Wrap-Up - This section summarizes the concepts and
application of the lesson. Valuing - This part integrates a desirable moral value in the lesson. Posttest -
This measures how much you have learned from the entire module. After going through this module,
you are expected to: 1. understand the concept of demand and price; 2. analyze the law of demand; and
3. enumerate the non-price determinants of demand. Directions: Choose the letter of the best answer.
Write the letter of your answer on a separate sheet of paper. 1. Which of the following statements
refers to demand? A. A relationship between the price of a product and the quantity demanded during a
given period. B. It refers to a quantity of a good or service consumers would choose to buy at a
particular price. C. It shows the number of goods that consumers are willing and able to buy. D. All of the
above 2. Which of the following statements does not describe the law of demand? A. It shows the
relationship between price and quantity demanded. B. There is a negative relationship between price
and quantity demanded. c. Price is directly affected by quantity demanded. d. None of the above 3.
Which of the following is TRUE about ceteris paribus? a. It is only focused on market demand. b. It refers
to factors of demand shift. c. It means that all other things held constant. d. None of the above
EXPECTATIONS PRETEST 4. Which of the following scenarios causes the demand to shift upward? a.
Consumers are satiated with product b. Increase in consumer’s income c. The price is expected to
decrease next week d. None of the above 5. Which of the following factors does not cause a shift in the
demand curve? a. Price b. The income of consumers c. Expectations of future prices d. None of the
above Directions: Enumerate the causes of unemployment and poverty. Write your answer in the space
provided below. Poverty Unemployment 1. ________________________ 1. _______________________
2. ________________________ 2. _______________________ 3. ________________________ 3.
_______________________ Economics, as per definition, it deals with human behavior and how people
interact with each other in a society. Hence, it is important to know how individuals make choices out of
the resources available. In the market and mixed economy, we discussed that individuals are free to
choose whatever they want to buy. There are many factors which signal them to buy a certain product.
However, price is the main indicator of why consumers purchase a good or service. This module will
discuss the relationship of the price with the consumer’s buying power. LESSON RECAP Market Demand
Demand is an economic principle referring to a consumer's desire to purchase goods and services and a
willingness to pay a price for a specific good or service (Chappelow, 2020). If we are talking about
market demand, it is defined as the willingness and ability of consumers to buy different quantities of
goods or services at any given time at various possible prices. Because of scarcity, you cannot get all
what you want. Even if you have enough money to pay for a new dress, you might decide not to buy it
because it defies you with an opportunity cost. There’s a great opportunity cost as the price of a product
gets higher – the less likely that you will buy. Since price influences our buying decision, consumers are
hesitant to buy products at a higher price. Price is the amount of money that has to be paid to acquire a
given product. The number of units of a good that individuals are willing and able to buy a particular
price during a particular period is called quantity demanded. As price increases, ceteris paribus, quantity
demanded decreases - this principle is called the law of demand. There is a negative relationship
between price and quantity demanded. Price and quantity demanded are regularly observed to be
negatively related for two reasons: 1. Substitution Effect – As the price of a good increase relative to the
price of the other goods, the opportunity cost of buying that good increases, and consumers will switch
to substitutes-other goods that can be used in its place. 2. Income Effect – As the price of a good rises
and income remains the same, consumers, who could no longer afford to buy all the things that they
used to buy, would normally buy less of the good whose price has been increased. Demand Schedule It
is a table showing the quantities of a product that would be purchased at various prices at a given time
and place. Table 1 contains a hypothetical schedule of the demand for sandwiches in a local market
during school days. The left column shows the various prices while on the right column shows the
number of units which consumers would choose to buy at a given price. As observed, as the price rises,
the quantity demanded declines. Table 1. Market Demand Schedule for Sandwiches Situation Price per
unit (Php) Quantity demanded (Units) A 30 20 B 25 40 C 20 60 D 15 80 Demand Curve It is a graph
showing the quantities of a product that would be purchased at various prices at a given time. The
market demand curve for sandwiches is a graphical representation of a demanding schedule for
sandwiches. As shown in figure 1, the price is scaled on the graph’s vertical axis and quantity on the
horizontal axis. Each point on the curve shows the number of sandwiches that consumers would choose
to buy at a particular. In situation A, at ₱30 consumers would buy 20 sandwiches. Situation B represents
the combination of 40 sandwiches at ₱25 while in situation C, consumers will buy 60 sandwiches at ₱20
and so on. When we connect all these points, we obtain the market curve, labeled as D – this represents
as demand curve. The market demand curve slopes downward towards the right. A downwardsloping
demand curve reflects the observed negative relationship between price and quantity – law of demand.
As the price decreases, the quantity demanded increases, and vice versa. Since the assumption is that
price is the only factor that affects the quantity demanded, for every price change, there is a movement
along the demand curve. When the price of sandwiches falls from ₱25 to ₱20, the number of units
demanded by consumers rises from 40 to 60. There is a movement along the demand curve from point
B to C. Non-Price Determinants and Shifts of the Demand Curve E 10 100 D We have discussed earlier
that price is the only factor that determines the quantity of a good or service that consumers choose to
buy. Demand can be also affected by other factors other than price, which is known as non-price
determinants. The non-price determinants are: (1) income of consumers; (2) tastes or preferences of
consumers; (3) number of buyers; (4) prices of related goods; and (5) expectations of future prices.
When these factors change, there is a shift in the entire demand curve. Figure 2 shows the shifts in the
market demand curve that results from a change in one of the non-price factors. The rightward shift
from D1 to D2 implies an increase in demand. Consumers would likely buy more sandwiches at every
price. For example, they would choose to buy 80 instead of 60 sandwiches at ₱20. An increase in
demand is an increase in the number of units that consumers would choose to buy at every price. The
leftward shift from D1 to D3 represents a decrease in demand. Consumers would choose to buy less
sandwiches at each and every price. For example, they would choose to buy 40 instead of 60 sandwiches
at ₱20. A decrease in demand is a decrease in the number of units that consumers would choose to buy
at each and every price. 1. Income Individual income may change depending upon the economic
situation. An increase in income leads consumers to buy more goods at every price. A decrease in
income leads consumers to buy fewer goods at every price. There are two types of goods as income
basis, normal and inferior goods. For normal goods, demand increases as income increases. If the
sandwich is a normal good, an increase in income leads to an increase in demand for sandwiches. For
inferior goods, demand decreases as income increases. An increase in income may lead some consumers
to buy less sandwiches because they can now afford to buy other better products like hamburgers or
pizza. 2. Tastes and Preferences An increase in the likeness of the people place on sandwiches would
lead them to buy more sandwiches at every price. When people become more aggressive to try new
snacks, some of the consumers might choose to buy fewer hamburgers at each and every price. 3.
Number of Buyers As the population gets bigger, the demand also increases. Metro Manila has a greater
demand because there are many consumers compared to other provinces. 4. Prices of the Related
Goods A. Substitutes Goods. As the price of a good increase the demand for that good decreases and its
substitute good will increase. Sandwiches and hamburgers are substitute goods. If the price of
sandwiches increases, consumer leads to buy fewer sandwiches and buys more hamburgers. B.
Complimentary Goods. As the price of a good increase the demand for that good decreases and the
complimentary good also decreases. Sandwiches and drinks are complimentary goods. If the price of
sandwiches increases, the demand for sandwiches decreases and so with the drinks. 5. Expectations of
Future Prices If people expect the price of sandwiches to rise next week, consumers may buy more
hamburgers now and consume fewer later on. If people expect the price of a sandwich to fall next week,
they may buy fewer sandwiches now and buy more later on. Activity 1: Law of Demand Directions: Read
and analyze the situation below. Put your answer in the box. Some students used to buy branded
products. These branded products are known for their quality and expensive price. Some students are
willing to buy more of these products because they feel superior and fame. Thus, the situation wherein
the students tend to buy expensive products violated the law of demand - which states that as price
decreases, quantity demanded increases? ACTIVITIES Activity 2: Up or Down Directions: Identify the
following situations below. Put (arrow up) if there is an increase in demand, and (arrow down) if there’s
a decrease in demand. ____________1. Overpopulation in urban area ____________2. There’s red tide
in Cavite ____________3. There will be an inflation next week, the demand for goods today is expected
to ____________4. You want to exchange your US dollar bill however, the peso will be expected to
become strong next week. ____________5. The price of ice cream increases, the demand for sugar cone
is expected to To summarize what you have learned in the lesson, answer the following questions: 1.
What is demand? 2. What is the law of demand? 3. What are the causes of demand shifts? WRAP-UP
Reflect on this! For you, what is the most important factor to consider when buying a product? Why?
Explain your answer. Directions: Read each statement carefully. Write T if the statement is correct,
otherwise write F. ____________1. Law of demand states that as price increases, quantity demanded
decreases. ____________2. Quantity demanded refers to the number of goods and services consumed
in a particular price. ____________3. The graph of demand is always upward sloping. ____________4.
For normal good, demand decreases as income increases. ____________5. As the price of a good
increase the demand for that good decreases and the complementary good also decreases. VALUING
POSTTEST References Amadeo, Kimberly. "What Really Makes the World Go Round." The Balance.
Accessed July 12, 2020. https://www.thebalance.com/what-is-demand-definition-explanation-effect-
3305708. Carnaje, Gideon P. Applied Economics. Vibal Group Inc., Quezon City, 2019. Chappelow, Jim.
"Demand Definition." Investopedia. January 29, 2020. Accessed July 12, 2020.
https://www.investopedia.com/terms/d/demand.asp. The Editors of Encyclopaedia Britannica. "Price."
Encyclopædia Britannica. June 01, 2018. Accessed July 13, 2020.
https://www.britannica.com/topic/price-economics. ACTIVITY 2: POSTTEST: 1. 1. T 2. 2. T 3. 3. F 4. 4. F 5.
5. T KEY TO CORRECTION PRETEST A 1. C 2. C 3. B 4. A 5. ACTIVITY 1: Brand name items are associated
with higher quality. Some people have greater preferences for high-quality products. Buying a
highquality product which happens to be expensive is not a violation of the law of demand. This is more
of tastes and preferences which make the demand for a good increases at any price levels. The law of
demand states that people would buy more at lower prices than higher prices, ceteris paribus.