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Change in Supply
1. A change in supply will cause equilibrium
price and output to change in opposite
directions.
a. An increase in supply will cause a
reduction in the equilibrium price and incase
in the equilibrium quantity of a good.
1. The increase in supply creates an
excess supply at the initial price.
3.
decrease.
Surplus
Law of Supply
A demand can decrease and cause a shift to the left of the demand curve for a
number of reasons, including a fall in income, assuming a good is a normal good,
a fall in the price of a substitute and a rise in the price of a complement.
If costs rise, less can be produced at any given price, and the supply curve will
shift to the left.
If costs fall, more can be produced, and the supply curve will shift to the right.
10. Illustrate in matrix and graphically varying market demand levels for prepaid
communication services (Globe, Smart & Suncel): types of demand curves
11. a. Illustrate in matrix and graphically an equilibrium situation for LRT/MRT prepaid
services. Show in the graph specific values of the prepaid tickets.
12. Show graphically varying demand levels for TV network services on a primetime
viewing (Kapamilya, Kapuso, & Others). Be sure to specify the programs.
Graphically show the relationship between the demand curve and the supply curve
in the following economic scenarios
1. A hoarding of goods due to a rising market demand resulting to higher prices of
the hoarded goods in the succeeding months.
2. A rumored coup detat against the Pinoy administration causing panic buying of
the basic commodities over the weekend.
3. A decrease in the purchasing power of the peso due to inflation that results in a
decrease in the demand for entertainment services
4. A hypothetical equal demand for news program services between GMA-7 &
ABS-CBN 2.
5. A sustained importation of meat from China (at lower prices) despite a stable
market situation.
6. Impacts of the freeze in Bohol on the market equilibrium for basic commodities
PART 1. Graphically show the relationship between the demand curve and the
supply curve in the following economic scenarios:
Quantity Demanded
Per Year
3 million
6 million
9 million
12 million
15 million
18 million
Quantity Supplied
Per Year
18 million
15 million
12 million
9 million
6 million
3 million
Problem: Is there a possible equilibrium for the flesh trade industry in Mars?
Prove your answer mathematically or graphically.
QUANTITIES/OUTPUTS (QTY)
1
2
3
4
5
GIVEN: PRICE (P) of Good X = 15/UNIT; FIXED COST (FC) = 10 and the
variable costs (VC) indicated in the matrix, work on the following problems:
1. Expand the matrix & show all types of production costs for Good X
2. Would/should you produce each output level? Why?
3. What rules of production are applicable in making decisions?
4. What is the most efficient level of production?
5. What law is applicable in solving these problems?
6. What does the law state?
7. What cost approach helps you decide on the most efficient production level?
8. Is the price of good X right? Why?
9. What pricing strategy does the problem depict?
10. Does the strategy pay? Why?
Problem Set 7:
BASIC PROBLEMS ON THE COMPUTATION OF ANNUAL INCOME
TAX
1.
Engr Gilbert Gonzales, single in status, earns a monthly income of Php 80,000
as a professor of MIT. His monthly payments include SSS Php 1800, Philhealth
Php 1200 & Pag-ibig Php 1000. What is his income tax due?
2. Nestor, a Muslim with two wives with 5 children each - all below 18 years of age,
earns a monthly income of Php 60,000 for his professional services at Company
end