DEMAND, SUPPLY AND
EQUILIBRIUM
Permintaan, Penawaran dan
Kesetimbangan
law of Demand
If the price of a good
decrease,
then
the
demand for these goods
will increase, whereas if
the price of a good rises,
the demand for such
goods would be reduced
"asumsi Ceteris Paribus
Hukum Permintaan
Jika harga suatu barang
turun, maka permintaan
terhadap
barang
tersebut
akan
bertambah, sebaliknya
jika harga suatu barang
naik, maka permintaan
terhadap
barang
tersebut
akan
berkurang”
asumsi
Ceteris Paribus
Ceteris paribus
(Hal-Hal lain yang
dianggap tetap)
Ceteris paribus
(other things being equal)






The price of other goods
income communities
consumer tastes
Total population
Forecasting the future
promotional company






Harga barang lain
Pendapatan masyarakat
Selera konsumen
Jumlah penduduk
Ramalan dimasa yang
akan datang
Promosi perusahaan
(Demand Schedule)
Skedul Permintaan
A tabulation of figures
showing the number
of goods / services
which are required at
various levels / rates.
Merupakan tabulasi
angka-angka
yang
menunjukkan
jumlah
barang / jasa yang diminta
pada berbagai tingkat /
harga.
Demand Schedule
Price
Amount
6
4
5
5
4
6
3
7
2
8
Demand Function
Is a mathematical relationship
between the variables affected
and affecting.
function is a demand
Qdx = f (Px)
Qdx: X number of items requested
Px: price of goods X
Fungsi Permintaan
Sedan Car demand function:
Qdx = 200 - 10P
Make a demand schedule Sedan Car
Draw the demand curve Sedan Car
Factors that affect the demand
a. The price of other goods
b. income communities
c. public taste
d. Company promotion
e. natural conditions
f. Total population
g. Forecast future
Throughout the movement of Demand Curve
Px
Shows that the
increase or decrease
in demand for goods
caused by changes
in the price of the
goods themselves.
Dx
5
A
4
B
3
2
C
1
0
20
40
60
80 100 120
140 Qx
Shifting of Demand Curve
(Px)
Rp
Indicate changes in demand for goods caused by changes
A
A1
in factors beyond the price of the 5
goods themselves.
4
B
3
B1
2
1
Dx
0
20
40
60
80 100 120
Dx1
140 (Qx)
Example
A
product if the price is sold Rp. 100 from 10
units, and if the price is 75 from 20 units.
Determine the demand function and graphed
m = y2-y1/x2-x1
= (20-10) / (75-100)
= 10/-25 = 2/-5
c = (m * –x1) + y1
= 2/-5 * -100 + 10
= 40+ 10 = 50
Qx = 50 – 2/5 Px
P
0,125
50,0
Q
1
1
Exceptions to the Law of Demand
.a.
Given case for inferior goods
b. Speculation case
c. Case goods prestice
d. false cases
Supply
Factors affecting supply:
a. the price of the goods themselves
b. the price of other goods
c. the cost to acquire the factors of production
d. technology used
e. government intervention, including taxes
f. objectives of the company
g. natural conditions
Supply Schedule
Is a tabulation of numbers showing quantity of
product/service offered on various price rate. The
Character of relation between price and number of
product offered is linear.
Supply Shedule
Price
Quantity
1
3
2
4
3
5
4
6
5
7
Supply Curve
Px
If the X product rise
increase, the quantity of
product X offered will also
increase and vice versa.
Sx
7
6
A
5
B
4
C
3
D
2
E
1
F
0
1
2
3
4
5
6
7
8
Qx
Supply function
Supply function basically shows mathematic relation
between price and number of product offered.
A simple supply function is:
Qsx = f (Px)
in which :
Qsx
: quantity of productX offered
Px
: price of product X
Sedan Car Supply function
Qs = -40 + 5P


Make a supply schedule of sedan car
Make a supply curve of the sedan car
Movement Along Supply Curve
Indicates supply rise or
inclination of a product
caused by the change of
product’s price
(Px)
Rp
Sx
5
B
4
3
A
2
1
C
0
20 40
60 80 100 120 140 (Qx)
Supply Curve Shifting
(Px)
Indicates a change towards a
product caused by the
changing factors outside the
product’s price
Rp
Sx
Sx1
5
4
A
3
B
2
1
0
20 40
60 80 100 120 140
(Qx)
Case : Supply function
If
the product price is IDR 500
sold 60 units and if the price is
IDR 700 sold 100 units
Define the supply function and
the graphic
P1 = Rp 500 , Q1 = 60 ; P2 =
Rp. 700, Q2 = 100
m = Q2 – Q1 / P2-P1 = (10060)/(700-500) = 40/200
Q = m X – mX1 + Q1
= 4/20X – 4/20 500 + 60
= 1/5P - 40
P
Q=1/5P -40
0,200
Q
Market Equilibrium
Happens when in a certain price rate, the amount of demand is
the same with the amount of supply in the market. This condition
can be shown trough demand and supply schedule, demand and
supply function and demand and supply curve.
Market Equilibrium
Px
Sx
5
4
3
2
1
Dx
0
10
20
30
40
50
Qx
Market Equilbrium
Demand: Qd = 200 – 10P
 Supply: Qs = -40 + 5P
Qs, Qd = thousand unit per year
P
= dozen million rupiah per unit




Define the cost and total of market equilibrium.
What will happen if the car price is set at IDR
150 million?
What will happen if the car price is set at Idr
170 million?
Changes in Equilibrium
1If the demand increases
2If the demand decreases
3If the supply increase
4If the supply decreases
EXERCISE

SEDAN CAR MARKET CASE
Demand Qd = 200 – 10 P
Supply Qs = -40 + 5 P
 How much is the cost and quantity equilibrium
 If it is set that the car price is IDR 150 million, apa what
will happen to the market equilibrium of the sedan car
market?
Remark: Qd, Qs = thousand unit per month
p
= dozen million rupiah per unit
EXERCISE

GABAH MARKET CASE
Demand of gabah di Malang Qd = 2000 – 3 P
Supply Qs = -500 + 2 P
 How much is the cost and quantity equilibrium of gabah?
 If the government set gabah basic price IDR 600.000/ton, what
will happen to the market equilibrium of gabah?
Remark: Qs, Qd = thousand ton per season
p
= hundred thousand rupiah per ton
PROBLEMS
1. Explain the following`statements, using
the supply and demand diagrams:
 Since drinking coffee in cafes has become
fashionable among adults, the price of a
cup of coffee has risen.
 It has been such a mild summer, the
electrical retailers are having cut price
sales to reduce their stocks of fans and air
conditioners.
c. Floods in Bojonegoro, Ngawi and Solo
have led to an increase in the price of rice
all around Midle of Java.
2. For each of the following markets,
indicate whether the stated change causes
a shift of the supply curve, a shift of the
demand curve, a movement along the
supply curve or a movement along the
demand curve.
 The hausing market: Consumers income
increase
 The domestic air travel market: a major
carrier goes out of business.
c. The computer market: the price of
broadband falls.
d. The milk market: the price of milk increase
and the amount of milk people are willing
to buy declines.
e. The fast-food market: the number of fastfood restaurants in the area increases.
f. The video rental market: the number of
consumers in the area decreases.
3. Draw a supply and demand diagram for
each of the following changes in the
bicycle market and show what happens.
 Inline skates replace bicycles as the most
popular form of transportation for young
people.
 Income of people who like to ride bicycles
increase.
 Technology for producing bicycles
improves.
 The cost of the metal alloy used in
producing bicycles increases.