The Impact of Labor Supply, Population, and Wages On Prices of Basic Commodities

Lesson 3.
The Impact of Labor Supply,

Population, and Wages on
Prices of Basic Commodities
Applied Economics
General Academic Strand | Accountancy, Business, and Management
Throughout history,
labor has been seen as
an essential way of
boosting the sense of
usefulness and belonging
of people, and supplying
financial support.
2
Employment is also
central to various other
aspects of life, such as
being a system of
socialization, a means of
social interaction, and a
basis of individual
identity.
3
Therefore, a job can be
seen as the cornerstone
of social organization
and an essential pillar of
an individual's
existence.
4
How do employment,
wage, and population
affect commodity
pricing?
5
Learning
Competency
Compare the prices of commodities and
analyze the impact on consumers (ABM_AE12-
Ie-h-6).
6
Objectives ● Discuss how the government determines
the prices of basic commodities.
● Analyze the effects of labor supply,

population, and wages on the prices of
basic commodities in the short and long
run.
7
The Labor Market
Labor Market
● It is a major component to
every economy and it is
present in both the
commodities and services
markets.
● It consists of the supply
and demand for labor.
8
The Labor Market
Labor Demand
The amount of labor that

employers wish to hire at a
given time, illustrated by the
labor demand curve
9
The Labor Market
Labor Demand Curve
● It shows the negative relationship between wage rate

and labor quantity.
● When the wage rate is low, employers are encouraged
to hire more workers.
10
The Labor Market
Labor Supply
● Amount of labor offered

for hire within a given
period
● Measured by the total
number of hours workers
are willing to work at a
given wage rate
11
The Labor Market
Labor Supply Curve
● It shows the positive relationship between wage rate

and labor quantity.
● When the wage rate is high, more people are willing to
work.
12
The Labor Market
Labor Market Equilibrium
The point at which labor

demand and labor supply
converge and intersect
13
The Labor Market
Wages
● Opportunity costs of
engaging in leisure
● Fewer people will work if
the wage rate is low.
14
Basic Commodities
● Commodities are commercially-available goods and

services that are compatible with other commodities.
● They are used primarily in creating other products,

doing other services, or consumed in themselves.
15
Basic Commodities
● Basic commodities are products that serve as

important needs for consumers’ lives and survival.
● Prime commodities are products that are not

considered to be basic necessities but are necessary to
consumers.
16
Employment and Unemployment Factors
Unemployment
● Occurs when people are in

between jobs or, if they do
not have work, are actively
seeking it
● High unemployment
cannot persist in the long
run
17
Employment and Unemployment Factors
Employment
An arrangement where the

employee will provide services
for the employer, and the
service shall be compensated.
18
Population as a Factor in Prices of Basic Commodities
● According to the Malthusian Theory, the population

grows at a faster rate than commodities.
● As the population rises, the resulting increase in

demand creates a strain on supply growth.
19
Population as a Factor in Prices of Basic Commodities
Example:
● The number of rice fields in the Philippines needs to be

enough to supply the needs of the increasing
population.
● At the same time, land should also be converted to

residential property to provide people with housing.
20
Wage as a Factor in Prices of Basic Commodities
● Wage push inflation is an average spike in the price of

commodities due to an increase in income.
● As the overall price on goods and services rises, there

is a need for higher wages to offset the higher prices.
21
● Commodities are commercially-available
Wrap-
Up goods and services that are compatible with
other commodities.
○ Basic commodities are products that are
important needs for the consumers’ lives
and survival.
○ Prime commodities are products that are
not considered to be basic necessities but
are necessary to consumers
22
Wrap-
Up ● There are different factors that can affect the
price of basic commodities. These factors are
employment, unemployment, population,
and wages.
● Together, all of these factors have a long-

lasting influence on commodity prices.
23

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Lesson 3.

The Impact of Labor Supply,

● Analyze the effects of labor supply,

The amount of labor that

● It shows the negative relationship between wage rate

● Amount of labor offered

● It shows the positive relationship between wage rate

The point at which labor

● Commodities are commercially-available goods and

● They are used primarily in creating other products,

● Basic commodities are products that serve as

● Prime commodities are products that are not

● Occurs when people are in

An arrangement where the

● According to the Malthusian Theory, the population

● As the population rises, the resulting increase in

● The number of rice fields in the Philippines needs to be

● At the same time, land should also be converted to

● Wage push inflation is an average spike in the price of

● As the overall price on goods and services rises, there

● Together, all of these factors have a long-

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