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APPLICATION

OF SUPPLY
AND DEMAND
PRICES
OF BASIC
COMMODITIES
Rice remains
the most
important food
item in the
daily meals of
Filipinos.
The sensitivity of quantity
demanded for rice to the
change in price of rice is not
only explained solely by the
change in its price itself
(substitution effect) but also by
the change in the real income
(income effect) of consumers.
If ever prices of basic
commodities in the market
increases, naturally, the
tendency of the consumers is to
look for substitute products
which are lesser in price.
For complementary products
such as coffee and sugar or
bread and butter, an increase in
price of any complementary
product will decrease the
demand for the complementary
item and vice-versa.
How it
Works
If the quantity demanded
changes a lot when prices
change a little, a product is said
to be elastic. This often is the
case for products or services for
which there are many
alternatives, or for which
consumers are relatively price
For example, if the price of Cola
A doubles, the quantity
demanded for Cola A will fall
when consumers switch to less-
expensive Cola B.
When there is small change in
demand when prices change a
lot, the product is said to be
inelastic. The most famous
example of relative inelastic
demand is that for gasoline.
As the price of gasoline
increases, the quantity
demanded doesn’t decrease at
all that much. This is because
there are very few good
substitutes for gasoline and
consumers are still willing to buy
it even at relatively high prices.
Why it
Matters
Elasticity is important because it
describes the fundamental
relationship between the price
of a good and the demand for
that good.
Elastic goods and services
generally have plenty of
substitutes.
Example of
elastic goods &
services:
Furniture, motor vehicles,
instrument engineering
products, professional
services, and
transportation services.
Inelastic goods have fewer
substitutes and price change
doesn’t affect quantity
demanded as much.

Examples are: gas, electricity,


water, drinks, clothing, tobacco,
food and oil.
LABOR
SUPPLY, POPULATION
GROWTH, AND WAGES
Labor laws and regulations have been
devised to protect labor from abuses by
employers and to improve the power of
labor to bargain for decent wages and
working conditions. Practices and
regulations in the labor market are
focused on minimum wage mandates,
labor regulations concerning hiring and
firing of workers.
Philippine minimum wage
policy has been the object of a
lot of attention because, from
the very start, government
minimum wage mandates have
been “high”. They were made
to carry the burden of raising
wages for workers.
Minimum Wage
and
Employment:
The Overall
Effects
Aggressive minimum wage rates
increases have led to reduction
in employment, making
households dependent on wage
incomes suffer significant drops
in their welfare, some falling
into poverty.
Based on studies conducted, when
minimum wages are raised, business
enterprises reduce their hiring of
labor. Thus, minimum wage changes
reduce employment.
The most vulnerable groups – the
young, less educated and
inexperienced workers – suffer most
from these observed relationships.
Low employment
creation is associated
with Philippine
economic growth.
At present, the prevailing minimum
wage of workers is ₱445.00 daily
multiplied by 24 days (number of
working days in the private sector) will
give the workers a gross monthly
income of ₱10,680.00. This does not
include deductions made on SSS,
PhilHealth and so on. This monthly
income is way below the income
threshold set by NEDA.
Underemployme
nt, Labor Force
Participation
The labor survey showed that
underemployment, however,
worsened from 17.9% last year to
19.7% this year. Underemployed
persons are those who are hired but
who want more work. NEDA said there
are about 7.7 million underemployed
Filipinos, most of whom were wage
and salary workers in private
The sacrifices overseas Filipino
workers (OFWs) make just to provide
a better life for their families earned
them the title of the nation’s bagong
bayani. In recent years, the
improvement of the economy often
attributed to their remittances
further cemented their mark in the
Philippines.
To recognize their invaluable
contribution to the Philippines,
December each year is marked
as the Month of Overseas
Filipinos through Proclamation
No. 276 signed by former
President Corazon Aquino in
1988.
POEA data show
that for over 5 years,
the highest number of
OFWs was deployed in
Saudi Arabia, followed by

The United Arab


Emirates.
OFWs
Remittances
The National Economic and
Development Authority (NEDA) in 2012
said that the Philippines cannot do
without the cash remittances from
OFWs. This is true as cash sent to the
country by OFWs, according to World
Bank, is a “key factor” for the resilience
of the Philippines. It has been able to
withstand recession amid the economic
crises of the previous years.
According to the Bangko Sentral ng
Pilipinas (BSP), OFW cash remittances
from January to August in 2015 reached
$16.21 billion (₱764 billion).
The same survey said the average cash
remittance per OFW is ₱65,000
($1,378). 2 in every 5 OFWs are still
able to have savings beyond the money
they send back to their families.
Beyond these figures, however, lies the
undeniable truth that Filipinos face a lot
of challenges as they seek a better
opportunity abroad.
As the country continues to laud its
citizens who seek greener pastures
abroad, overseas Filipino workers
should be prioritized through policies
and programs that can adequately
protect them.
The Philippine
Peso and Foreign
Currencies
The Philippine Peso is the currency of
the Philippines. The currency code
for Pesos is PHP, and the currency
symbols is ₱.
Below is the Philippine Peso rates
and a currency converter.
Top PHP Exchange Rates
USD EUR AUD GBP CAD AED JPY MYR SGD
PHP 0.02169 0.01904 0.02824 0.01525 0.02822 0.07968 2.42382 0.08442 0.02930
INVERSE 46.0956 52.5261 35.4106 65.5931 35.4350 12.5500 0.41257 11.8451 34.1297
ECONOMY
The Philippines is estimated to be
the 45th largest economy in the
world, with a GDP of USD $216
billion (2011). Major exports
include semiconductors and other
electrical components, transport
equipment, clothing, copper and
petroleum products and fruits.
The economy of the Philippines
was the second largest in East
Asia after World War II. However,
the economy stagnated until
1990s, based on economic
policies and political volatility,
and other Asian countries
surpassed the Philippines in
terms of GDP growth.
Effects of Peso
Depreciation
against US Dollars
1. Higher prices in peso terms for
imported goods and services;
2. A weak peso will negate the
impact of falling crude oil prices
abroad;
3. Increase in the pump-prices of
gasoline and other petroleum
products;
4. It fuels inflation due to increase in
the price of imported goods;
5. Higher debt servicing on the part
of the government;
6. Domestic tourists find it
expensive to visit places abroad
because they will need more
pesos to buy dollars.
There are also positive effects with the
depreciation of the peso. Some of them
are:
1. Exporters and overseas Filipino
workers and their dependents now
receive more pesos for every dollar
they exchange;
2. Foreign tourists find it attractive to
visit the Philippines with their dollars
History
Prior to the introduction of a formal
currency, trade in the Philippines
was performed using a barter
system, and later on “piloncitos”
(small pieces of gold) and gold
barter rings.
The Spanish introduced coins to the
Philippines when they colonized the
country in 1521.
The United States captured the
Philippines in 1901, and established
a new unit of currency that was
pegged to exactly half of a US
Dollar in 1903.
During the World War II, the
Philippines was occupied by Japan,
and new notes were introduced yet
The Central Bank
of the Philippines was
established in 1949,
leading to the
reintroduction of a
formal
Filipino currency.
THE PHILIPPINE
HOUSING SHORTAGE
AND THE REAL ESTATE
BOOM: RENT AND PRICES
Housing demand in the Philippines
has been mainly dictated by
housing affordability, which refers
not only to a household’s ability to
pay but also to the price of
housing in the market and the
financing schemes available.
Housing affordability is low in the
country. This is attributed to several
factors: first, the ratio of unit
housing cost to income is rapidly
rising, this is mainly due to rising
land prices.
Second, there are few low-cost
alternatives to homeownership in
the formal market.
Moreover, The rental market,
specifically low-cost rental housing,
is limited, thus, households engage
in various informal housing
arrangements (e.g. rent-free
occupation, squatting) and multi-
occupancy dwelling has become
common. Third, innovative housing
finance is limited.
Affordable
Housing
Socialized housing units, or
those which cost less than PHP
450,000 (US $10,800) can be
purchased with a monthly
amortization of PHP 2,302 (US
$56).
The Pag-Ibig Fund, the country’s
state-owned and subsidized
housing loan provider, provides a
fixed rate of 4.5% for 30 years for
socialized housing units. The
problem is that these low-end
housing units are usually far from
work.
An aggressive public mass
housing program built on more
realistic and accessible financing
mechanisms, including provision
of government subsidies, is
needed to close the huge
backlogs in mass housing and
new housing needs.
An aggressive program would
result in a surge in construction
activities, and create a significant
number of jobs in the
construction sector, which would
benefit many poor and low
income households.
THANKS!
Any questions?

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