GREETINGS!!

MELISSA FRANCIA L. ALMADRONES

MOTIVATION:
 Lesson Plan
D. Activity Proper
a. Activity
Class Participation in discussion(Define the );
“MANAGERIAL ECONOMICS” Group Activities ( ); and
Short Quiz.
b. Analysis
Teacher: Melissa Francia L. Almadrones Date: _Sept. What is
17 , 2024___ What is the
What is the

c. Abstraction
I. OBJECTIVES The teacher will give a brief description
LESSON V The teacher will explain the
At the end of the lesson, the students should be able to: The teacher will explain the
Know the Market supply curve; Supply shifters;; Supply functions;; Linear d. Application
supply function; Let the students write a list of any piece of information they can remember about
Producer surplus ; Market equilibrium; Equilibrium; Price ceiling; Price floor;
Effect of a change in supply and ; Simultaneous Shifts in Supply and Demand. IV. EVALUATION
II. SUBJECT MATTER Give the correct answer of the following questions. (Multiple Choices)
Title: “MANAGERIAL ECONOMICS”
References:
Books: Andy Schmits. December 29, 2012. .Managerial Economics Principles (v.
1.0) .https://2012books.lardbucket.org/pdfs/managerial-economics-principles.pdf
Materials: PPT, Laptop and wide screen.

III. PROCEDURE
A. Preparation
Prayer
Greetings
Greet the students then ask them to seat properly.
Checking of attendance
Motivation
B. Review .
Topic: Know the Supply and Demand Analysis
-Demand schedule, Demand curve, Demand Shifters, Types of goods, Demand V. ASSIGNMENT
functions , Linear demand function, Consumer surplus
C. Presentation
(Present lesson for the day)
The teacher presents the topic for the day and posts the day’s objectives that are going to
attained.
Know the Market supply curve; Supply shifters;; Supply functions;; Linear
supply function;
Producer surplus ; Market equilibrium; Equilibrium; Price ceiling; Price floor;
Effect of a change in supply and ; Simultaneous Shifts in Supply and Demand. -GOD BLESSED-
COURSE TITLE: MANAGERIAL
ECONOMICS
 MARKET SUPPLY CURVE
A market supply curve is the
supply curve of all producers or the sum of all
individual producer's supply curves.
The market supply curve is a graph
detailing how much of a good or service all the
producers would furnish at different prices.
It slopes upward to the right because
producers are enticed to produce more at
higher prices because their profits would
increase. The market supply curve is steeper in
the short run than in the long run. A steep
curve indicates there is little flexibility in the
production process. Price changes have little
impact on the quantity produced.
For example, if the price of corn
increases, farmers are unable to immediately
grow more corn. However, next year they could
substitute corn for another crop. A "supply
curve" is normally assumed to be the market
supply curve unless an individual producer is
specified.
 SUPPLY SHIFTERS

Supply Shifters

Supply shifters cause the

quantity supplied to change in
response to changes in price. Supply
shifters, which change the quantity
supplied at every price point, cause
the supply curve to move right or left.
 SUPPLY SHIFTERS
1. Change in the Cost of Production
-Common reasons for a decline in production costs include the
Six Key Supply following:
Shifters a. Technology advances.
b. Employees find a more efficient way to work.
c. Businesses improve production strategies.
Several key factors can
d. Businesses find less expensive resources.
cause supply to shift. They e. Businesses purchase or design more efficient tools and
influence what producers do at equipment.
every price point, meaning each
one affects the whole supply 2. Change in the Cost of Resources
curve. These factors reflect
changes in: The costs of producing a good or service can change. The cost
of producing ice cream, for example, will change when the price of one
of the necessary production resources—like sugar—changes. When the
1.The cost of production.
price of sugar increases, the producers of ice cream will produce fewer
2.The cost of resources. units at each selling price. The entire supply curve of ice cream will
3.The number of producers. shift to the left (a decrease in supply of ice cream) when the price of
4.Expectations. sugar increases.
5.The demand for related
 SUPPLY SHIFTERS
Six Key Supply
Shifters
3. Change in the Number of Producers 5. Change in the Demand for Related Goods
When businesses see big profits happening
in a business they’re not in, some will enter that Goods that are often used together, such as cars
market. All of a sudden, the number of producers and gasoline or cereal and milk, are complementary goods.
goes up and the supply increases. Goods that can easily be switched out for each other are
For example, when mountain bikes grew in substitutes. Producers might adjust the amount of a product
popularity and profits rose, the number of businesses they supply if there is a change in the availability of
producing and selling them increased. The new complementary goods or substitutes.
producers took resources from elsewhere to make
bikes. This shifted the industry’s supply curve to the If something happens to the price of one of the
complements, the other complement suppliers will change
right.
their production accordingly. Producers have alternatives. So,
they will respond to a change in the price of one complement
4. Change in Expectations by changing the supply of the other.
If producers expect higher or lower future
prices for their products, they may change the For example, if the price of gasoline is skyrocketing,
amount supplied today. producers who make cars might switch from supplying SUVs
Producers want to sell the most product that use a lot of gas to supplying fuel-efficient electric cars.
when they think prices will be highest, and they The production of substitutes is similarly affected. A price
adjust their supply accordingly, which has an effect increase in butter may lead to an increase in the supply of
 SUPPLY SHIFTERS
Six Key Supply
Shifters
6. Change in Subsidies, Taxes, and More

If the government makes a change to the tax code, freeing up more

of people’s paychecks for spending on what they need and want, it increases
the supply of money people can spend. Businesses may also have more
money to produce and supply more of their goods or services. The combined
effect is to shift the entire supply curve to the right. Conversely, businesses
will supply less when less money is available.

Government influences supply through tax policies and subsidies,

regulations, and direct government spending on goods and services. An
increase in tax rates, an elimination of subsidies, or an increase in regulations
may cause producers to pull back on production and supply less. By contrast,
a decrease in tax rates, added subsidies, or less government regulation have
the opposite effect. These factors will likely cause an increase in supply.
 SUPPLY FUNCTIONS
What is Supply Function? Explaining the Supply Function Formula

The supply function in economics is a The formula for the supply function is
mathematical formula that depicts the relationship typically expressed as
between quantity supplied, price of the commodity, where:
and other related variables. Here, the quantity
supplied is expressed as a function of the price. It
helps businesses and governments to study and
monitor an economy's demand-supply situation.
Other factors influencing the function
include government policies, wages, raw materials,
the technology used, and most importantly, the price
of related goods like complimentary items and
substitutes.
The inverse supply function, which depicts
the price as a function of quantity, is also an
important concept in economics.
These two functions can help economists,
businesses, and governments understand the
economy so everyone can benefit from commercial
activities.
 SUPPLY FUNCTIONS
Problem : Tom's supply equation for Explaining the Supply Function Formula
selling handmade mugs is as follows:
The formula for the supply function is
Q = 5 + 1.5P typically expressed as
where:
How many mugs will he sell if the price is
$2 a mug? What if the price is $4 a mug?
To find out how many mugs Tom is willing
to supply, we simply plug in the price into
Tom's supply equation. When the price is
$2 a mug, we find that

Q = [5 + 1.5(2)] = 8 mugs

When the price is $4 a mug, Tom is willing

to sell

Q = [5 + 1.5(4)] = 11 mugs
 LINEAR SUPPLY FUNCTIONS
Formula: Qs​=c+dP

A supply function represents the relationship between the quantity of a good supplied (Qs) and its price
(P). When expressed in a linear form, it takes the equation:

Qs=c+dP

Interpretation of terms:
Qs: Quantity supplied of the good.
P: Price of the good.
c: Intercept term, which represents the quantity supplied when the price is zero (usually not realistic but
theoretical).
d: Slope coefficient, which indicates how much the quantity supplied changes in response to a change in
price.

Plotting a Supply Curve from a Linear Function

Example: Qs = −30+20P
Interpretation:
Intercept (c): -30
Slope (d): 20
 PRODUCER SURPLUS
What Is a Producer Surplus?

Producer surplus is the difference between

how much a person would be willing to accept for a
given quantity of a good versus how much they can
receive by selling the good at the market price. The
difference or surplus amount is the benefit the
producer receives for selling the good in the market.

The Formula for Producer Surplus Is:

Total revenue - marginal cost = producer

surplus
 PRODUCER SURPLUS
The Formula for Producer Surplus Is:

Total revenue - marginal cost = producer surplus

Company B produces stickers using a machine purchased for Php5,000. The marginal costs attributed to
each sticker are equal to Php1.50, and each sticker sells for Php4.00. The company sold 600 stickers for the year.
The sticker machine is housed in the owner's home office, so the only fixed costs are the machine. Find producer
surplus and profit for the company for their first year of business.

Producer Surplus = (600 x Php4) – (Php1.50 x 600) = Php1500

Producer surplus for Company B is Php1,500.

Profit = (600 x Php4) – [(Php1.50 x 600) + Php5,000] = –Php3,500

Though producer surplus for the company is positive at Php1,500, profit for the company is negative at –
Php3,500. The key difference between the two is that profit includes fixed costs while producer surplus does not.
 MARKET EQUILIBRIUM
Equilibrium is the state in which
market supply and demand balance each other,
and as a result prices become stable. Generally,
an over-supply of goods or services causes
prices to go down, which results in higher
demand—while an under-supply or shortage
causes prices to go up resulting in less demand.

A market is in equilibrium if at the

market price the quantity demanded is equal to
the quantity supplied. The price at which the
quantity demanded is equal to the quantity
supplied is called the equilibrium price or market
clearing price, and the corresponding quantity is
the equilibrium quantity.
 MARKET EQUILIBRIUM

Solution:
formula: Qs=Qd P=?
Qd=Qs
Let say:
Demand=Qd=100-3P
Qd=100-3P
Supply=Qs=2P+20 100-3P=2P+20
Qd=100-3(16)
P=16 100-20=2P+3P
Q=52 Qd=100-48
Graphic Equilibrium (Q,P) ( 52,16 ) 80=5P
Qd=52
16=P

P=16
Qs=2P+20

Qs=2(16)+20
PRICE CEILING AND PRICE FLOOR
PRICE CEILING AND PRICE FLOOR
Price Floors are minimum prices set by the
government for certain commodities and services that it
believes are being sold in an unfair market with too low of
a price and thus their producers deserve some assistance.
Price floors are only an issue when they are set above the
equilibrium price, since they have no effect if they are set
below market clearing price. When they are set above the
market price, then there is a possibility that there will be
an excess supply or a surplus.

Price Ceilings are maximum prices set by the

government for particular goods and services that they
believe are being sold at too high of a price and thus
consumers need some help purchasing them. Price
ceilings only become a problem when they are set below
the market equilibrium price. When the ceiling is set below
the market price, there will be excess demand or a supply
shortage.
 EFFECT OF A CHANGE IN SUPPLY

An increase in supply is illustrated by a

rightward shift of the supply curve. This
decreases the price and increases the quantity
sold.
A Decrease in Supply

A decrease in supply is illustrated by a

leftward shift of the supply curve. This increases
the price and decreases the quantity sold.
SIMULTANEOUSLY SHIFTS IN SUPPLY AND DEMAND

As we have seen, when either the demand

or the supply curve shifts, the results are
unambiguous; that is, we know what will happen to
both equilibrium price and equilibrium quantity, so
long as we know whether demand or supply
increased or decreased.
However, in practice, several events may
occur at around the same time that causes both the
demand and supply curves to shift.
To figure out what happens to equilibrium
price and equilibrium quantity, we must know not
only in which direction the demand and supply
curves have shifted but also the relative amount by
which each curve shifts. Of course, the demand and
supply curves could shift in the same direction or in
opposite directions, depending on the specific
events causing them to shift.
GROUP ACTIVITIES:

Instructions:
-
SHORT QUIZ:
Give the correct answer of the following questions.
ASSIGNMENT:

Supply and Demand

THANK YOU!! AND GOD BLESSED!!