Applied Economics
General Academic Strand│Accountancy, Business, and Management
Name: Date:
2.1 The Law of Supply and Demand
Constructing Demand and Supply Curve
30 minutes
Learning Competency
At the end of this activity, you should be able to explain how demand and supply is
determined (ABM_AE12-Ie-h-4).
Recall
To construct a d
emand or supply curve, follow the steps below:
Step 1: Using the demand or supply function, and then substitute
different values of price to determine the quantity demanded or
quantity supplied.
Example 1:
Qd =15 - 4P, where P = 2, 4, 6
For P = 2:
Example 2:
Qs = 10 + 6P, where P = 2, 4, 6
For P=2:
Lesson 2.1: The Law of Demand and Supply 1
Applied Economics
General Academic Strand│Accountancy, Business, and Management
Repeat Step 1 for all other price levels.
Step 2: Create a table with price on the first column and quantity
demanded or quantity supplied on the second column. A sample
table is shown below.
Demand or Supply Schedule of _________
Price Quantity demanded (Qd) or
Quantity supplied (Qs)
Fill out the table with the prices and the corresponding values of
Qd or Qs, based on the computations made in Step 1.
Step 3: Once the table is completed, create a graph using the information
in the demand or supply schedule. Remember that price is on the
y-axis, while quantity demanded or quantity supplied is on the
x-axis.
The demand curve should slope downward because there is an inverse
relationship between price and quantity demanded.
Lesson 2.1: The Law of Demand and Supply 2
Applied Economics
General Academic Strand│Accountancy, Business, and Management
Instructions
Construct a demand and supply curve.
Product
Construct a demand and supply curve based on the following situations. Remember to
follow the steps in creating these. Show a complete and stepwise solution for each
problem.
1. Cars by Dennis sells toy candies in the small town of Port Ris. Its supply is described
by the function Qs = 15+ 2P. What would happen to the quantity supplied if the price
levels were ₱2, ₱4, ₱6, ₱8, and ₱10? Create a supply schedule and plot a supply curve
for his toy cars.
Lesson 2.1: The Law of Demand and Supply 3
Applied Economics
General Academic Strand│Accountancy, Business, and Management
2. Jane likes to buy candies from Snacks by Dennis. Her demand for candies can be
described by the function Qd = 30 - 3P. Describe Jane’s demand given the different
price levels ₱2, ₱4, ₱6, ₱8, and ₱10. Create a demand schedule and plot a demand
curve of the candies.
Lesson 2.1: The Law of Demand and Supply 4
Applied Economics
General Academic Strand│Accountancy, Business, and Management
Suggested Rubric for Grading
The rubric below is a suggested one. Your teacher may modify the rubrics based on your
needs. Consult your teacher for the final rubric.
Performance Levels
Criteria Suggested
1 2 3 Score
Weight
Beginning Proficient Advanced
Proficiency Proficiency
Answer The answers are Some of the answers The answers are
incorrect in all steps. are c
orrect, but some complete and
have partial solutions. correct i n all steps. ×3
Some answers are
miscalculated.
Logical The output follows an Necessary The output f ollows a
Solution illogical order to components are logical order:
arrive at an answer. present but solutions making a stepwise ×2
are presented in solution, a table, and
illogical order. a graph.
Analysis of the The output did n
ot The output has The output has all
problem include all the enough information the n
ecessary
necessary but the strategy used information and
information to come to come up with the strategy to come up ×1
up with an answer. answer is not with the answer.
understandable.
Total Possible Score 18
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Lesson 2.1: The Law of Demand and Supply 5
