Demand Group

Labutin, Michelle
Sisracon, Nico Rafael
Sisracon, Precious Mary Neil
Surigao, Alexis
NATIONAL INCOME
 ↑ Labor Resources
↑ Supply of Goods
High Population Growth

High Rates Per Capita

LAND RESOURCES
Lesson 1:

THE LAW
Specific Objectives:
Define demand;
State the law of demand;
Identify and explain the determinants of demand;
Relate how these determinants affect demands in the
market; and
Differentiate a change in demand and a change in
quantity demand.
OVERVIEW
• Products whose prices were determined by the
government:
 rice
 gasoline
 sugar
 rent of apartment
 some basic goods and services
• In market economy, prices are determined by
the interaction between demand and supply
of goods and services. (GOVERNMENT DOES
NOT INTERFERE)
 The Meaning of
DEMAND
– the desire of a particular good
backed up by sufficient purchasing
power.
– the schedule of various
quantities of commodities which
buyers are willing to purchase at
various prices in a given time and
place.
Quantity Demand

May be aptly described as

signifying a quantity of a
particular good that an
individual is willing and
ready to buy at a given price
at a particular time and
place.
Potential Demand
– not backed up by the
ability to pay (NO
PURCHASING POWER)

– demand does NOT mean

mere need or desire.
Effective Demand
– backed up by the ability
to pay

– demand refers to actual

purchase of a good or
service
DEMAND SCHEDULE

– table of the quantity

demanded of a certain good at
different price levels. (Given the
price level, it is easy to determine the
expected quantity demanded.)
 HYPOTHETICAL DEMAND SCHEDULE OF
BEEF PER MONTH IN MANILA
Price of Beef (Per Kilo) Quantity Demanded (In
Kilos)

200.00 50

170.00 60

150.00 90

130.00 110

110.00 130

100.00 160

↑ Price (P) → ↓ Quantity Demanded (QD)

↓ Price (P) → ↑ Quantity Demanded (QD)
The DEMAND CURVE

– a graphic
representation of a
market demand schedule.
The LAW OF DEMAND
“The quantity of a commodity
which buyers will buy at a
given time will vary inversely
with the price.”

↑ P → ↓ QD
↓ P → ↑ QD
 Two
Reasons
???
SUBSTITUTION EFFECT
DETERMINANTS OF DEMAND

1. Income
2. Population
3. Tastes and Preferences
4. Price Expectations
5. Prices of Related
Goods
The CETERIS PARIBUS ASSUMPTION
– assumes that “ALL other
things are EQUAL or
CONSTANT”.
Using this assumption, the law of
demand can be restated as
“assuming that the
determinants of demand are
constant, price and quantity
demanded are inversely
proportional to each other.”
Cet. Par.? Dropped?

If the determinants of
demand are considered
major factors or greatly
affects the demand in
the market.
CHANGES IN DEMAND
– the shift of demand curve
which is brought about by the
changes in the determinants of
demand

Decrease Increase In
In Demand Demand
CHANGES IN QUANTITY DEMANDED

– was brought about

by the changes in
price