Robert Kwan Laurel

Supply and Demand is one of the if not the most popular economic concepts and if you ask anyone
on the street about it they will most likely at least have a basic understanding of it. In my last post I
talked about a basic concept of economics, inflation which is basically an over supply of money
cause it's value to drop. Before reading my post i'm pretty sure you've heard about it at least once
in your life, another concept that you are probably familiar with is Supply and Demand Supply and
Demand is a pretty simple concept and is relatively easy to understand and by the end of this post
you will probably have a good understanding of it.
So to start things off lt's get the definitions of terms over with. Some of the terms that you need to
know are, Demand, Supply, Quantity Demanded and Supply Demanded. Demand is how much of
a good or service buyers desire, While Supply is how much the producers/manufacturers can offer.
While Quantity Demanded is how much consumers are willing and able to buy and Supply
Demanded is how much suppliers are willing/able to supply. So what is the difference bet ween
Demand and Quantity Demanded, and Supply and Quantity Supplied? Well the difference is that
Quantity Demanded is how much you are willing and able to buy so no matter how much you want
that new iPhone or eat at Philly's if you don't have the money you don't add to the Quantity
Demanded and this is the same case for Supply Demanded, Supply Demanded is how much the
suppliers are willing and able to supply so even if they have some rice still in their warehouse but
aren't willing to supply it for one reason or another such as stockpiling for a shortage or not selling
the rice due to to the low price as long as they are not willing to supply it no matter the reason it
does not add to the Quantity Supplied.
Quantity Demanded and Quantity Supplied are btoh affected by price with Quantity Demanded
going down with price as people may not afford it or feel that they are not getting their money's
worth and Quantity Supplied going up with an increase in price as supplies will earn more with the
increase leading to more production.

Two graphs are shown below a supply curve and a demand curve. Looking at the demand curve
you can see that as the price increases the Quantity Demanded decreases as they have an
negative relationship, while on the supply curve as the price goes up so does the Quantity
Supplied as for supply curves Price and Quantity Supplied have a positive relationship.

A change in price is not the only thing that can heppen on Supply or Demand Curves a shift can
also happen a shift is when your supply or demand curve moves to the left or right left being a
decrease in supploy or demand and right meaning an increase in supply or demand. For demand
curves some of the reason shifts happe are, Number of buyers, Income, and Prices of related
goods these shift the demand as they are not just movements along the curve which is a change in
price but a change in demand itself such as in the example of number of buyers when there is an
increase in the number of buyers there is more people who desire the product leading to an
increase in demand. Prices of related goods can also affect the demand of a good an example is
McDonalds and Jollibee if the prices of McDo increases then the demand for Jollibee as Jollibee
becomes a cheaper alternative and this is also the case for the oppsite situation where Jollibee
increases their prices and Mcdo's demand increases this happens because McDo and Jollibee are
substitute goods, another case of related goods affecting demand are complementary goods and
example of this is chips and dip if the demand of chips increases so will the demand of dips and if
the demand of dips inreases so does the demand of chips this happens because chips and dip are
complementary goods. When demand is increased the Quantity Demanded also increases as long
as there is no change in price and Quantity demanded decrease when there is a shift to the left or

decrease because as shown in the graph below on the when the price was $2 the Quantity
Demanded was 50 but on the second curve when the price was $2 the Quantity demanded was 30
and despite the price being the same the Quantity demanded decreased.
For the supply curve the factor that can cause the supply cirve to shift are, Number of sellers,
Technology, Other related goods, Resource costs, Expectations, Subsidies/Taxes for number of
sellers due to an increase in the number of sellers the supply will increase as there is now more
people who are selling a certain product so the supply curve of the product or good shifts to the
right as there is an increase of supply. Another reason for a shift in supply curve is resource costs if
a resource suddenly becomes more expensive suppliers will be less willing and able to produce
their good or service. Another factor fpr shifts in supply curve is technology if there is a new
technology that allows the suppliers to produce some thing in a higher quantity or at a cheaper
price they would be more willing to supply it as they would gain more profit from doing so. Just like
in the Demand Curve when the supply curve shifts to the right Qs also increases as long as there
is no change in price.
Now that you understand supply and demand let me move on the market equilibrium equilibrium os
when the Quantity supplied and Quantity demanded reach a state of balance where the needs

wants of the suppliers and consumers are both adequately met however whenever there is a shift

this can cause problems in the market equilibrium as if the supply is too high this causes a surplus
and if demand is too high this causes a shortage so whenever a shorage or surplus occurs prices
are usually adjusted to achieve equilibrium.
This can cause problems in real life such as a shortage or surplus of rice which we just recently
had you may think that a surplus is only a good thing as it means cheaper rice but surplus can also
have negative effects as due to the rice not being sold many of it may eventually rot and become
inedible also because of this businesses won't be able to earn as much which may effect their
workers pay. However in the Philippine rice accounts for 35% of the populations total calorie intake
and a shortage could be more dangerous than a surplus. It it widely known that the Philippine has
a large population of poor people and for many people especially people who have lower income
rice is a large part of their monthly expenses and a shortage of rice could leave millions of people
straving and this is with our current population of 98.39 million which is growing every second so
we have to make sure that we are near the market equilibrium so that we may be able to satisfy
both the consumers and producers.
Thank you for reading this blog post, if you have any suggestions, ideas or critism please put them
below and thank you again for reading this and I hope you enjoyed it and most of all learned more
about ecnomics in the process.

Sources: Supply, demand and market equilibrium. (n.d.). Retrieved August 28, 2015, from
https://www.khanacademy.org/economics-finance-domain/microeconomics/supply-demandequilibrium
Heakal, R. (2003, November 30). Economics Basics: Supply and Demand | Investopedia.
Retrieved August 28, 2015.
Smith, C. (n.d.). Supply and Demand Curves: Understanding Price and Quantity in the
Marketplace. Retrieved August 28, 2015.
Balisacan, A., & David, C. (n.d.). Retrieved August 28, 2015, from
http://dirp3.pids.gov.ph/ris/pjd/pidsjpd95-2rice.pdf