Unit 2: Law of Demand and Supply
2.1. The Law of Demand and Supply
Let’s Connect
1. In the first round, how did you choose which item to buy when presented with two
similar products?
Answers may vary. The students will likely choose based on the price of the item.
2. In the second round, how did you choose which item to sell when presented with two
similar products?
Answers may vary. There can be two possibilities. Some students may choose
based on profitability; the more expensive item is more lucrative. They can also
choose based on the affordability of the item because they can increase profit
through increased sales.
3. What is the difference between the choices you made as a buyer and as a seller?
Answers may vary. As a buyer, they should be more concerned with their budget
and the item price. They will always want to get the most out of their money. On the
other hand, as a seller, they will always maximize their profits. They will either sell the
one with the higher price or sell the cheaper one but in larger quantities.
Check Your Progress
1. Is quantity demanded the same as demand? Why or why not?
No, these are not the same. Quantity demanded is the number of units buyers are
able and willing to buy at a particular price at a given time, while demand is the set of
all quantities demanded at different prices.
2. Why does the supply curve slope upward?
The supply curve slopes upward because there is a positive relationship between
price and quantity supplied. As price increases, quantity supplied increases, and
vice versa.
2.1. The Law of Demand and Supply 1
Unit 2: Law of Demand and Supply
Let’s Calculate
1. Nita loves fashion. Her willingness and capacity to buy clothes can be described by
the demand function Qd = 80 - P. Create a demand schedule and plot the demand
curve given the different price levels of clothing at ₱25, ₱35, and ₱ 45.
Qd1 = 80 - 25
Qd1 = 55
Qd2 = 80 - 35
Qd2 = 45
Qd3 = 80 - 45
Qd3 = 35
Price (P) Quantity demanded (Qd)
₱25 55
₱35 45
₱45 35
2.1. The Law of Demand and Supply 2
Unit 2: Law of Demand and Supply
2. Anna is a garment manufacturer. Her willingness and capacity to supply clothes can
be described by supply function Qs = 65 + 4P. Create a supply schedule and plot the
supply curve given the different price levels of clothing at ₱25, ₱35, and ₱45.
Qs1 = 65 + 4(25)
Qs1 = 65 + 100
Qs1 = 165
Qs2 = 65 + 4(35)
Qs2 = 65 + 140
Qs2 = 205
Qs3 = 65 + 4(45)
Qs3 = 65 + 180
Qs3 = 245
Price (P) Quantity supplied (Qd)
₱25 165
₱35 205
₱45 245
2.1. The Law of Demand and Supply 3
Unit 2: Law of Demand and Supply
Try This!
A. True or False. Write true if the statement is correct. Otherwise, write f alse.
True 1. The market is a place where buyers and sellers meet to exchange
goods and services.
True 2. A command economy is characterized by a heavily regulated
market.
False 3. Many countries adopt either a free market or a command
economy.
False 4. Supply and demand should go together.
True 5. The law of supply describes the positive relationship between
price and quantity supplied.
True 6. The law of demand describes the inverse relationship between
price and quantity demanded.
False 7. In the demand equation, Q
d = a - b(P), a stands for the slope of
2.1. The Law of Demand and Supply 4
Unit 2: Law of Demand and Supply
the demand curve.
True 8. In the demand equation, Q
d = a - b(P), P stands for price.
False 9. Quantity supplied is the ability and willingness of buyers to
purchase goods and services.
True 10. Market equilibrium is the point at which quantity supplied is
equal to quantity demanded.
B. Fill in the blanks. Choose the correct word from the given options and fill in the blanks.
Demand 1. ____________ (Demand, Quantity demanded) is the set of all
quantities the buyer purchases at different price levels.
Upward 2. The supply c urve slopes _ ___________ (downward, upward).
More 3. Keeping all other factors constant (ceteris paribus), buyers will
purchase ____________ (less, more) with lower prices.
Quantity Supplied 4. ____________ (Supply, Quantity supplied) is the number of units a
seller is willing and able to sell at a given price.
More 5. Suppliers, driven by profit, will sell ____________ (less, more), at a
higher price.
Challenge Yourself
1. Create a realistic scenario of market activity. In creating a market scenario, be sure to
include buyers and sellers, and specify what goods or services are being sold and
bought in the market.
Answers may vary. An example of market activity is the school setting wherein the
buyers (the students and parents) and sellers (the school) exchange education and
other items like books and uniforms.
2.1. The Law of Demand and Supply 5
Unit 2: Law of Demand and Supply
2. Compare and contrast quantity demand and quantity supplied.
Both quantity demanded and quantity supplied determine the ability and willingness
of buyers or sellers to buy or sell at different price levels. Both are presented as
points along the demand curve or supply curve. The difference is that quantity
demanded reflects the buyer's ability and willingness to purchase while quantity
supplied reflects the seller’s ability and willingness to sell.
2.1. The Law of Demand and Supply 6
