MICROECONOMICS Vadilla Mutia Zahara SE.

, ME
MARKET EQUILIBRIUM (DEMAND AND SUPPLY)
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 CONCEPTUAL FRAMEWORK
THE MARKET EQUILIBRIUM
(DEMAND AND SUPPLY)

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MARKET
Market is where buyers and sellers come together to carry out an economic
transaction

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 DEMAND

Quantity of Demand
The Quantity of a good and services that consumers are
willing and able to purchase at a given price in a given
time period.

Quantity of Supply
The Quantity of a good and services that producers are
willing and able to selling/provide at a given price in a
given time period.

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 THE LAW OF DEMAND
Simply states that “As a price of a
product falls, the quantity
demanded will usually increase”.
Ceteris Paribus

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 DEMAND SCHEDULE
Harga Kuantitas
$0.00 12
0.50 10
1.00 8
1.50 6
2.00 4
2.50 2
3.00 0
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 DEMAND CURVE
Price

Harga Kuantitas
$3.00
$0.00 12
0.50 10
2.50
1.00 8
1.50 6
2.00 2.00 4
2.50 2
1.50
3.00 0
1.00

0.50

Quantity
0 1 2 3 4 5 6 7 8 9 10 11 12
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INCREASE IN DEMAND – WHY?
Income Effect
When the price of a project falls, then people will have an increase in their “real” income.
“real” income reflects the amount that their incomes will buy. With this increase, the people are
more likely to buy.
Example: I have 28 RMB budgeted for lunch. McD lunch is only 14 RMB so I buy 2 instead of 1
lunch.

Substitution Effect
When the price falls, then the product will be relatively more attractive to people that other
products (whose price hasn’t changed)
Example: I buy McD coffee each day for 10 RMB. Costa changes their price to 15 RMB so I stop
going to McD and switch to Costa.

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INCREASE IN DEMAND – WHY?
Income
Normal Goods
For most goods, as income rises the demand for the product will also rise.As income
rises, the demand curve will shift to the right. Ex: Air Travel

Inferior Goods
For inferior products, the demand for the product will fall as income rises.This is
because the consumer will start buying higher priced items.The demand curve will
shift to the left and eventually disappear.Ex: cheap wine, “generic” soap

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INCREASE IN DEMAND – WHY?
Taste/Preferences
Other Factors A trend or advertising campaign may influence demand.
For example: Increase in Hamster sales during the Chinese Year of the Rat.
The size of the population
Changes in the age structure of the population
Changes in Income distribution
Government Policy changes
Seasonal Changes

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 MOVEMENT ALONG THE CURVE OR SHIFT IN
DEMAND CURVE
Price

Increase
demand

Decrease
Demand
D2

D1
D3

0 Quantity
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 SUPPLY SHEDULE
Harga Kuantitas
$0.00 0
0.50 0
1.00 1
1.50 2
2.00 3
2.50 4
3.00 5
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 SUPPLY CURVE
Price

$3.00 Harga Kuantitas

$0.00 0
2.50 0.50 0
1.00 1
2.00 1.50 2
2.00 3
1.50 2.50 4
3.00 5
1.00

0.50

Quantity
0 1 2 3 4 5 6 7 8 9 10 11 12
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 MOVEMENT ALONG THE CURVE OR SHIFT IN
SUPPLY CURVE
S3
Price
S1
S2

Decrease in
supply

Increase in
supply

Quantity
0
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 DEMAND SUPPLY EQUILIBRIUM

Equilibrium
It is Price and Quantity that balance supply and demand

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 EQUILIBRIUM
Demand Schedule Supply Schedule

Harga Kuantitas Harga Kuantitas

$0.00 19 $0.00 0
0.50 16 0.50 0
1.00 13 1.00 1
1.50 10 1.50 4
2.00 7 2.00 7
2.50 4 2.50 10
3.00 1 3.00 13

At $ 2.00, quantity demand is the same as

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the quantity supply! MICROECONOMICS-VADILLA MUTIA ZAHARA SE.,ME
 EQUILIBRIUM CURVE
Price

Supply
$3.00

2.50 Equilibrium

2.00

1.50

1.00

0.50 Demand
Quantity
0 1 2 3 4 5 6 7 8 9 10 11 12
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EQUILIBRIUM
It is where consumers and sellers dont
want to increase or decrease the
amount of goods consumed / sold.
Demand = Supply

(QDX = a – bP) = (QSX = –a + bP)

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 EXERCISES
Diketahui fungsi :
Permintaan Qdx = 30 – 6P
Penawaran Qsx = -10 + 4P
Ditanyakan :
Tentukan keseimbangan Harga ?
Gambarkan keseimbangan tersebut ?

syarat keseimbangan harga:

QDX = QSX

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 PENYELESAIAN
30 - 6P = -10 + 4P Qs = -10 + 4P
-6P – 4P = -10 – 30
Qs = -10 – 4(4)
10P = 40
Qs = 6
P = 40/10
P=4
Maka harga keseimbangan E (6 , 4)
QDX = 30 -6P QDX = 30 -6P
Q=0 P=0
0 = 30 – 6P Q = 30 – 6(0)
P = 30/6 Q = 30
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KURVA
QSX = -10 + 4P P=0
QSX = 0 QSX = -10 + 4(0)
0 = -10/-4 Q = -10
P
P = 2,5

Qs = -10 + 4P

5 E(6,4)
4
2,5 Qd = 30 – 6P

-15 -10 -5 0 5 10 15 20 25 30 35 Q
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