A
It refers to limitation of supply in relation to demand of a commodity
Scarcity
What a buyer pays for one unit of a specific good or service
Price
Goods that are often used together
Complementary goods
Refer to the amount of some good or service consumers are willing and able to purchase at each price
Demand
Financial or time investment that has already been incurred and cannot be recovered.
Sunk Cost
A legal maximum price that one pays for some good or service
PRICE CEILING
Where workers offer their skills, knowledge, and services to employers in exchange for wages or salaries.
Labor Market
It refers to the quantity supplied exceeds the quantity demanded.
Surplus
The extra benefit consumers receive from buying a good or service, measured by what the individuals would have been willing to pay minus the amount that they actually paid
Consumer Surplus
A marketplace where people, companies, and government trade financial assets like stocks, bonds, loans, and currencies.
Financial Market
3 Factors affecting economizing resources
Not able to maximize the resources
Lack of knowledge
Missed opportunity
(3) Factors that affect the labor supply
Number of workers
Required education
Government policies
Factors affecting shift in the demand for goods and services
Buyer
The demand is __________ if % change in QD < % change in price
Inelastic
A price floor that makes it illegal for an employer to pay employees less than a certain hourly rate.
(5) Factors affecting shift in the demand for goods and services
Buyer
Income
Trends
Expectation
Related Goods
It refers to the “price” of borrowing in the financial market; a rate of return on an investment.
Interest Rate
A good in which the quantity demanded rises as income rises, and in which quantity demanded falls as income falls.
Normal Goods
Government agencies monitor prices of basic goods
Department of Trade and Industry
Factors affecting shift in the supply for goods and services
Subsidies & Taxes
Technology
Other goods
Number of seller
Expectations
Resource cost
A milk tea shop increased the price of its regular milk tea from ₱100 to ₱120. As a result, quantity demanded decreased from 500 cups to 400 cups per week.
Compute for PED
22.22%
18.18%
1.22 Elastic
A bakery sells bread at ₱50 per pack and supplies 1,000 packs per week. The price rises to ₱60, and the bakery increases supply to 1,300 packs per week.
Compute for PES
26.09%
18.18%
1.43 Elastic
A student's monthly allowance increases from ₱5,000 to ₱6,000. Spending on restaurant meals increases from ₱1,000 to ₱1,400.
Calculate the YED.
Is the good normal or inferior? Is the demand income elastic or income inelastic?
33.33%
18.18%
YED = 1.83
2. Is it a normal or inferior good?
👉 Normal good, because YED is positive.
3. Is demand income elastic or income inelastic?
👉 Income elastic, because YED > 1.
Suppose the price of coffee increases from ₱100 to ₱120.
Because of this, the quantity demanded of milk tea increases from 500 cups to 600 cups.
Calculate XED. What is the relationship between coffee and milk tea?
18.18%
18.18
The XED is positive (+1.00).
Coffee and milk tea are substitute goods.
A bank increases its personal-loan interest rate from 10% to 12%. As a result, loan applications decrease from 1,000 to 800.
Calculate the elasticity of demand for borrowing.
-22.22%
18.18%
-1.22 (Absolute Value)
1.22 Elastic