Demand and Supply Interaction

A farmer in Mindanao produces a surplus of bananas because prices have risen above equilibrium due to an increase in demand abroad. What is the most likely consequence of this surplus on local markets in the Philippines?

• Prices in local markets will stabilize as demand increases.

• Local banana prices will drop due to oversupply.

• Farmers will plant fewer bananas to avoid surplus.

• The government will set a price floor to protect farmers.

A government policy increases the price of rice to support local farmers. How might this affect equilibrium in the market if the price is above equilibrium?

• Demand will increase, and there will be no surplus.

• Supply will decrease, and the market will clear.

• A surplus of rice will emerge as supply exceeds demand.

• The equilibrium price will shift to match the government price.

A local clothing retailer lowers the price of their products by 30% to attract more buyers. What is the likely effect if the demand for their products is elastic?

• Total revenue will increase as more customers buy their products.

• Total revenue will decrease since lower prices mean lower profit.

• Demand will remain unchanged because consumers prioritize quality.

• Supply will increase to counteract the demand change.

In Metro Manila, public transport operators demand higher fares due to rising fuel costs. If fares are increased, what would likely happen to demand?

• Demand for public transport will rise as fuel becomes costlier.

• Demand will decrease as commuters seek alternative transport.

• Equilibrium price will remain the same due to fixed costs.

• Supply of public transport will increase significantly.

During the holiday season, the price of ham in supermarkets increases, yet supply is limited. What is the economic outcome if consumers continue to buy at these high prices?

• Shortage persists due to sustained demand.

• Surplus emerges as production meets demand.

• The equilibrium price decreases.

• Producers reduce prices to clear inventory.

If the government imposes a price ceiling on onions during a shortage in the Philippines, what might happen in the market?

• Onion farmers will increase supply to meet demand.

• A black market for onions might develop.

• Consumers will buy less as prices are controlled.

• Onion imports will decrease to stabilize prices.

In a free market, what typically happens when there is a surplus of fish in a Philippine port city?

• The price of fish decreases until equilibrium is reached.

• The government intervenes to regulate the market.

• Local fishers will cut their production costs.

• The surplus will automatically disappear as demand rises.

A supermarket in Cebu introduces 'cost-free' promotional offers to increase foot traffic. If demand exceeds supply for these promotional items, what is the likely outcome?

• The store will achieve market equilibrium.

• A shortage of promotional items will occur.

• The price of other goods in the store will decrease.

• The supply of promotional items will increase.

If the price elasticity of demand for water in Metro Manila is low, what happens when water prices increase?

• Consumers drastically reduce consumption.

• Demand remains relatively unchanged.

• Supply decreases to match lower demand.

• Alternative water sources are immediately sought.

The Philippine government decides to remove subsidies for LPG. How will this likely affect equilibrium price and quantity?

• Equilibrium price will decrease, and quantity will increase.

• Equilibrium price will increase, and quantity will decrease.

• Both price and quantity will remain the same.

• Demand will increase to offset higher costs.