Intro to Economics and Law of Supply and Demand
Philippine UNY
Study guide, definitions and notes
ECONOMICS
o Economics: helps us solve the problem on excess supply and excess demand, and lead it
to a balanced supply and demand. In our needs, we do not want oversupply. it means
wastage of income. For entrepreneurs, it is not efficient if their stocks or supplies are
greater than the actual demand. It is a loss not revenue. There are terms that you must
learn to understand the market situations.
o Demand or the amount of good or service consumers are willing to purchase at each
price. If customers cannot pay for it, there is no effective demand. PRICE is what a buyer
pays for a unit of the specific good or service. The total number of units purchased at
that price is called the QUANTITY DEMANDED
LAW OF SUPPLY AND DEMAND
o Explains the Interaction between the Sellers of a product and the Buyers.
o It shows the relationship between the availability of a particular product and the desire
(or demand) for that product has on its price
THE LAW OF DEMAND
o If all other factors remain equal, the higher the price of a good, the fewer people will
demand that good.
Example, if the price of video game drops, the demand for games may increase as more
people want the games.
FACTORS AFFECTING DEMAND
• Income of Buyers
• Number of Potential buyers
• preferences
• complementary products
THE LAW OF SUPPLY
o The law of supply demonstrates the quantities that will be sold at a given price
o Producers supply more at a higher price because selling at higher quantity at a higher
price increases revenue
