Exercise No.
___
NAME________________________________ Grade & Section ___________ SCORE _____
THEORY OF DEMAND
A. Keeping all other factors constant, graphically show the effects of the following on the demand for
sugar. Below each graph, indicate whether there is an increase, decrease, or no change in
demand/quantity demanded.
1. The population expects that there will be 4. The price of coffee goes up
shortage of sugar one month from now
2. The population consumes more 5. The price of sugar goes up
ultrasweet to sugar substitute
3. The price of sugar goes down
B. Identify which of the following is CHANGE IN DEMAND and CHANGE IN QUANTITY DEMANDED.
_________________ 1. The price of air transport went up and less tickets were bought.
_________________ 2. The price of air transport went up and more bus tickets were bought.
_________________ 3. The price of gasoline goes down and more is bought.
_________________ 4. The price of gasoline goes down and more motor oil is bought.
C. Given the following demand function for a commodity Qd = 135 - 8p
a. Find the quantity demanded if the price is 10.00
b. What is the corresponding price to a quantity demanded of 80?
Exercise No.___
NAME___________________________ Grade & Section ___________ SCORE______
THEORY OF SUPPLY
A. Keeping all other things constant, graphically show the effects of the following:
1. A union in the garments industry 3. A roll back in the price of gasoline is
successfully negotiates a new contract scheduled to take effect at the end of the
and raises wages. What happens to month. What is its effect on the current
the supply of garments? supply of gasoline?
2. The government increases importation 4. Price of rice decreases. Show its effect
of corn. Show its effect on the supply on the supply of rice.
of corn.
B. Identify which of the following is a CHANGE IN SUPPLY and CHANGE IN QUANTITY SUPPLIED
______________________1. The price of rice increases and sellers sell more.
______________________2. A very effective pesticide had been developed and the supply of
rice increased.
______________________3. Oil companies expect a substantial decline in oil prices in the future
and they increase current supply of oil.
______________________4. The government granted fertilizer subsidy for rice production
through the “buy-two-take-one” program of GPEP. As a result,
more rice is sold.
C. Given the following supply function of a commodity Qs = 50 + 10 P
a. Find the quantity supplied if the price is 15.00. __________________________________
b. What is the corresponding price to a quantity supplied of 380? _______________________
Exercise No. ___
NAME________________________________ Grade & Section ___________ SCORE ____
DEMAND, SUPPLY AND MARKET EQUILIBRIUM
1. Based on the following functions for demand and supply, compute the demand and supply
schedules: (Show your solution)
A. Qd = 500 – 20 P ; Qs = 50 + 10 P
Price (P) Quantity Quantity
Demanded Supplied
5.00
10.00
15.00
20.00
25.00
2. Show below the graphs of the supply and demand schedules and label properly.
3. Based on your schedules, indicate if a surplus or shortage exists and its pressure on price
Price Surplus (+) Pressure on
Shortage (-) Price
5
10
15
20
25
4. Using the Qd and Qs equations, derive mathematically the equilibrium price and equilibrium
quantity.
Exercise No.___
NAME________________________________ Grade & Section ___________ SCORE _____
PRICE ELASTICITY OF DEMAND
A. Using the demand data given below, complete the table by computing total revenue at each of the
seven prices and the six elasticity coefficients between each of the seven prices and indicate
whether demand is elastic, inelastic, or of unitary elasticity between each of the seven prices.
Price Qty Total P1+P2 Q1+Q2 Character
(P) Demanded Revenu ∆P ∆ Qd 2 2 Σd of
e Demand
1.00 300
.90 400
.80 500
.70 600
.60 700
.50 800
.40 900
B. Complete the summary table below based on your answers in Activity A.
If demand is The Elasticity If price rises, If price falls,
Coefficient is total revenue will total revenue will
Elastic ____________ _____________ ____________
Inelastic ____________ _____________ ____________
Unitary ____________ _____________ ____________
Note:
Total Revenue = Price x Quantity Demanded
Exercise No.___
NAME_____________________________________ Grade & Section___________ SCORE ____
THEORY OF CONSUMER BEHAVIOR: UTILITY APPROACH
Table 1 shows Cassandra’s utility from the consumption of Popcorn (Pc) and Candy bars (CB) during a
week.
Total Marginal Total utility Marginal
Utility from utility from MUPC from utility from MUCB
Quantity Popcorn Popcorn ------------- Candybars Candybars ------------
TUPC MUPC PPC TUCB MUCB PCB
0
1 20 13
2 36 26
3 50 36
4 62 44
5 72 51
6 80 57
PPC = P10 PCB = P5.00
1. Compute for MUPC & MUCB
2. Cassandra’s weekly allowance is P40. Answer the following if she spends her entire
income.
c. How much popcorn and how many candy bars will Cassandra consume each week
if she maximizes her utility? ________ popcorn; ________ candy bars
d. Show that the 2 utility maximizing conditions (equi-marginal principle and the income
constraint) are satisfied.
b.1. MUPC MUCB
-------- = --------
PPC PCB
b.2. I = PPC QPC + PCB QCB
e. If Cassandra consumes 3 bags of popcorn and 2 candy bars, compute and explain
why with this combination, she is not maximizing utility.
Exercise No. ___
NAME________________________________ Grade & Section ______________ SCORE _____
Theory of Consumer Behavior:
INDIFFERENCE CURVE APPROACH
A. Assume that the price of Good X (Cake) is P 30.00 and the price of Good Y (Chocolate) is P30.00.
1. If the total budget or income of the consumer is P 180.00, what is the equation of the budget
line? ___________________________________________________________
2. If the entire budget is spent on X, how many units of Good X can be consumed?
________________________________________________________________
3. If only Good Y is bought, how many units can be purchased? _______________
4. Draw the budget line described above on the grills below, and label its corresponding equation.
5. Using the same diagram in No. 4, plot and label the indifference curve using the following data
below:
6. At what combination of Cake and Chocolate can you find consumer’s equilibrium. Label this
point on the graph.
QX QY
1 10.0
2 5.0
3 3.0
4 2.3
5 1.7
6 1.2
7 0.8
8 0.5
9 0.3
10 0.2
B. If your budget for pizza and coke is P40, and the prices are Pz = 20 per slice and Pc = 10 per bottle,
respectively,
(a) Compute the maximum amounts of pizza and coke you can buy from your budget.
(b) Using your answer in (a), draw the budget line on a graph.
(c) If you maximize your level of satisfaction and be in equilibrium at 2 slices of pizza, how
many bottles of coke can you buy?
(d) Using your data in (c), draw your consumer’s equilibrium on a graph.
(e) Analyze and explain your graph.
Exercise No. ___
NAME________________________________ Grade & Section___________ SCORE ____
THE PRODUCTION POSSIBILITY CURVE
Given the following possibility combinations of food and clothing that an economy can produce:
Possibility No. of Units No. of Units
Combination of Food of Clothing
A 0 400
B 100 380
C 250 300
D 400 150
E 470 0
a) On the space provided, draw the production possibilities curve.
b) Why does the economy have to choose between food and clothing in using the available
resources?_____________________________________________
c) Give all the efficient combinations of food and clothing: ________________
d) What combinations represent inefficient or incomplete use of at least one resource?
_____________________________________________________
e) What law in economics does the outward curvature of the PPC reflect?
______________________________________________________________
f) What are the unattainable combinations? _____________________________
g) Why is the PPC or PPF called a “frontier”?____________________________
h) On the given graph, illustrate what will happen to the PPC when there is economic growth?
_______________________________________________
i) What are the factors that will promote economic growth?
1. _______________________________________________________
2. _______________________________________________________
Y
X
50 100 150 200 250 300 350 400
Units of Clothing
Exercise No.___
NAME________________________________ Grade & Section___________ SCORE ___
SWOT Analysis
Directions: Think of a business you can create and operate. Present it using the SWOT
Analysis proforma. There is a rubric at the back for the point system.
STRENGHTS WEAKNESSES
OPPORTUNITIES THREATS
