Grade

School NAIC SENIOR HIGH SCHOOL 11

Level
Learning
LESSON Teacher LESTER PUNONGBAYAN APPLIED ECO
Area
EXEMPLAR
Teaching Semester/ 2nd Sem/ 3rd
January 22, 2024/ WEEK 6
Date Quarter Quarter
Time ALS HUMSS: 7:00 – 9:00 AM

I. I. OBJECTIVES By the end of the lesson, students will be able to:

1. Explain the concept of market pricing and its role in economic decision-
making.
2. Analyze real-world examples of how market prices affect consumer and
producer behavior.
3. Evaluate the implications of changes in market pricing on individual,
business, and government decisions.

A. Content The learner demonstrates an understanding of economics as an applied science and

Standards its utility in addressing the economic problems of the country
B. Performance The learners shall be able to analyze and propose solution/s to the economic
Standards problems using the principles of applied economics
C. Most
Essential Determine the implications of market pricing on economic
Learning decision-making
Competencies
II. CONTENT The implications of market pricing on economic decision-making

III. LEARNING
RESOURCES
A. References DEPED CALABARZON Learning Module 1 (1-9)
1. Teacher’s
N/A
Guide pages
2. Learner’s
Materials TV/Laptop/ Chalkboard
pages
3. Textbook
N/A
pages
4. Additional
Materials from
Learning N/A
Resource (LR)
portal
B. List of
Learning
Resources for
N/A
Developmental
and
Engagement
Activities]
IV.
PROCEDURES
A. Introduction Pretest
Part I. Graph Analysis
Directions: Please analyze the graph and answer the questions below. Write
your answer on the space/s provided for each question.
3. Using the chart above, kindly describe the point where there is a
a) surplus ____________________________________
Possible Answer: A surplus occurs when the price of a product is set above the
equilibrium price, causing the quantity supplied to exceed the quantity demanded.
This is represented in the chart by the price level above the intersection of the
supply and demand curves.
b) shortage ___________________________________
Possible Answer: A shortage occurs when the price of a product is set below the
equilibrium price, causing the quantity demanded to exceed the quantity supplied.
This is represented in the chart by the price level below the intersection of the
supply and demand curves.
c) equilibrium in price _________________________
Possible Answer: The equilibrium price is the point where the supply curve
intersects the demand curve. At this price, the quantity supplied equals the
quantity demanded, and the market is in balance.
4. What is surplus, shortage and equilibrium price? Define the terms.
Surplus______________________________________________________________
Possible Answer: A surplus occurs when the quantity supplied of a product
exceeds the quantity demanded at a given price. This often leads to a reduction in
prices as sellers attempt to sell excess goods.
Shortage_____________________________________________________________
Possible Answer: A shortage occurs when the quantity demanded of a product
exceeds the quantity supplied at a given price. This often leads to an increase in
prices as buyers compete for limited goods.
Equilibrium price_____________________________________________________
Possible Answer: The equilibrium price is the price at which the quantity of a
product supplied equals the quantity demanded. It is the point at which the supply
and demand curves intersect, ensuring market balance.

Part II:
Directions: Please read the statements carefully. Encircle the correct answer.
1. In the market, the price elasticity for the demand of canned goods sold by Aling
Puring Grocery Store is the:
a) ratio of the percentage changes in quantity demanded for the
goods to the percentage change in its price
b) responsiveness of revenue to a change in quantity of the canned goods
c) ratio of the change in quantity demanded divided by the change in its
price of the canned goods
d) response of revenue to a change in the price
2. If demand for sacks of rice in Aling Puring Grocery Store is price elastic, then a:
a) rise in the price of sacks of rice will raise total revenue of the grocery
b) fall in the price of sacks of rice will raise total revenue of the
store
c) fall in the price of sacks of rice will lower the quantity demanded
d) fise in the price of sacks of rice won't have any effect on total revenues
3. If the cross-price elasticity between soap bar and liquid soap commodities is 1.5,
a) the two goods are luxury goods
b) the two goods are complements
 c) the two goods are substitutes
d) the two goods are normal goods
4. The price elasticity of demand for a certain good tends to be:
a) smaller in the long run than in the short run
b) smaller in the short run than in the long run
c) larger in the short run than in the long run
d) unrelated to the length of time
5. If the price elasticity of supply of cup noodles is 0.60 and the price increase by 3
percent, then the quantity supplied for cup noodles increases by how by?
a) 0.60 percent. c) 1.8 percent
b) 0.20 percent d) 18 percent

B. The Marketing Price System

Development
Last module, we talked about the market demand, market supply and market
equilibrium. In our new topic, we will link more of these variables to the market
price system. For example, in the article above, the causes and effects of the
water shortage around the Philippines could be best explained if we could
understand the concepts of demand and supply elasticity of the clean water.

Price System in a Market Economy

Let us find out more about the price system. We have learned that demand is the
willingness of the consumers to buy goods and services. In economics, the
willingness to buy goods and services should be accompanied by the ability to buy,
also called the “purchasing power”. This is referred to as an effective demand
(source:Investopedia).

Price System in a Market Economy and Its Characteristics

The price system is the mechanism that drives decision-making and resource
allocation in a market economy. It operates based on the interaction of supply
and demand and serves as a communication tool between producers and
consumers.

Decentralized Decision-Making

In a market economy, there is no central authority dictating production or

consumption decisions. Instead, individuals and businesses make these
decisions based on prices.

Example: A farmer decides what crops to grow based on which ones

fetch higher prices, while a consumer chooses products based on
their affordability and preferences.
Prices Reflect Supply and Demand

Prices adjust based on market conditions:

 If demand increases (e.g., during a holiday season), prices rise

because more people want the product.

 If supply increases (e.g., during a harvest), prices tend to drop

because there’s more available.
This interaction ensures that prices remain fair and reflect the real
value of goods and services.

Resource Allocation

The price system helps allocate resources where they are most needed or
valuable.

Example: If smartphones are in high demand, more factories might

shift to producing components for phones instead of other
electronics, ensuring resources like labor and raw materials are used
efficiently.

Flexibility

The price system adapts to changes in the market.

Example: If a natural disaster reduces the supply of wheat, prices

will rise, signaling to consumers to use wheat products more
sparingly and encouraging producers to find alternative sources or
increase production.

Incentive for Efficiency

Producers are motivated to operate efficiently to lower costs and increase

profits. The price system rewards those who can produce high-quality
goods at competitive prices.

Example: A company that innovates to produce cheaper but better-

quality products can sell more and earn higher profits.

Freedom of Choice

In a market economy, individuals and businesses have the freedom to

make decisions:

 Consumers can choose what to buy based on their needs and

budget.

 Producers can decide what to produce and how to sell it. This
freedom fosters competition and innovation.

Limited Government Intervention

In a market economy, prices are primarily determined by supply and

demand, with minimal government interference. However, governments
may step in during specific situations, such as to prevent price gouging or
monopolies.

Example: Setting a price cap on basic goods like rice or fuel to

ensure affordability during crises.

Coordination of Economic Activity

Prices act as signals that coordinate actions among producers and

consumers without direct communication.
 Example: If the price of coffee beans rises, coffee shop owners
might adjust prices, and customers might opt for smaller cups or
alternative beverages.

Promotes Competition

The price system encourages businesses to compete by offering better

quality, lower prices, or innovative products to attract consumers.

Example: Two brands of smartphones might compete by

introducing new features or offering discounts.

Income Distribution

Prices also influence how income is distributed.

Example: High demand for skilled workers in a particular field might

lead to higher wages, while low-demand jobs may offer lower pay.

Example is when a tables are for sale in your community today and is assumed
that they are not very important as compared to other products or commodities
that we need to survive especially that our movements are very limited.
 Law of Supply and Demand

The law of supply and demand explains the interaction between the sellers of a
product and the buyers. It shows the relationship between the availability of a
particular product and the desire (or demand) for that product has on its price.

C. LEARNING ACTIVITY # 1: Identification

Engagement
Directions: Please read the sentences carefully. Identify the word or phrase
that is
appropriate to each item.
1. A ________________ shows the relationship between quantity demanded
and price
in a given market on a graph.
2. The __________________________ states that, higher the price, the
 higher the
quantity supplied.
3. __________________means that a given percentage changes in price
leads to an
equal percentage change in quantity demanded or supplied.
4. _______________means the effect on the change in demand of one good
as a
result of a change in price of related to another product.
5. __________________ those goods for which the demand rises as
consumer income
rises.
6. _______________the coefficient of the elasticity is less than 1; when an
increase in
price causes a smaller % fall in demand.
POST TEST
Directions: Please read the statements carefully. Encircle the correct answer.
1. What does market pricing primarily reflect in a market economy?
A. Government regulations
B. Supply and demand
C. Fixed costs of production
D. Consumer income levels
2. When the price of a product increases, what is the most likely response
from consumers?
A. Buy more of the product
B. Look for substitutes or alternatives
C. Ignore the price change
D. Produce their own version of the product
3. Which of the following is an example of how market pricing influences
producers?
A. Producers lower prices to compete with others.
B. Producers disregard prices and produce the same amount every time.
C. Producers always increase prices regardless of demand.
D. Producers rely only on government subsidies to make decisions.
4. If a product is in high demand but there is limited supply, what typically
happens to its price?
A. The price decreases.
B. The price remains the same.
C. The price increases.
D. The product becomes free.
5. How does market pricing help allocate resources efficiently?
A. By keeping prices constant regardless of demand or supply.
B. By signaling to producers where resources are most needed.
C. By relying on government policies to distribute goods.
D. By ensuring equal distribution of resources to all sectors.

Part II: Directions: Identify each item if true by writing T and if false write
F before each number.

6. Market pricing eliminates the need for competition among producers.

7. Rising prices often lead consumers to reduce their demand for a product.
8. In a market economy, prices act as signals that influence both producers
and consumers.
9. Market pricing is entirely controlled by the government in a market
economy.
10. A price increase for raw materials can cause producers to raise the
prices of finished goods.
 Answer key

1. Answer: B. Supply and demand

2. Answer: B. Look for substitutes or alternatives
3. Answer: A. Producers lower prices to compete with others.
4. Answer: C. The price increases.
5. Answer: B. By signaling to producers where resources are most needed.
6. Answer: False
7. Answer: True
8. Answer: True
9. Answer: False
10. Answer: True

Write your personal insights about the lesson using the prompts below.
V. I understand that ___________________.
REFLECTION I realize that ________________________.
I need to learn more about __________.

Prepared by:

MARIA TERESSA N. ALDAY

Social Science Teacher

Checked by:

MARIA CARLA A. NAZARENO

School Principal II