DEMAND and

DEMAND LAW
 Definition of demand
 Demand is a desaire accompanied by willingness and ability to buy goods
and service that they want.

 The demand for a type of good is the amount that buyers are willing to pay
at the prevailing price level in

 demand "describes the overall state of the relationship between price and
quantity demanded“

 Quantity of a good demanded "the quantity demanded at a given price level"

Can demand accour

any time?
 Demand law

 Demand theory explain the relationship between quantity demand and

price

it is a hypothesis which states that the lower the price of an item, the
Demand law greater the number of requests for the item and the higher the price of an
item, the less the amount of demand for the item.

Why price and

quantity of demand
have opposite relation
 Factor affecting demand

 The price of the item itself

 Price other goods that are closely related to these goods
 Household income and community average incomen
 The pattern of income distribution in society
 Community taste
 Total population about future conditions
 Demand Curve
 A curve that describes the nature of the relationship between the price of an item
and the quantity demanded by buyers

 Demand is the overall state of the relationship between price and quantity
calculated

 The quantity demanded of a good is the quantity demanded at a certain price level
Condition Price (P) Quantites
requested (Q)
P 5000 200
Q 4000 400
Q = f(P)
R 3000 600
Demand List list
S 2000 900
T 1000 1300
 Demand Curve

Price

The demand curve for generaly

decreases from top left to the bottom
5 P right

3 R

2 S Why P and Q move in

Do opposite direction

Quantity
200 600 900
 demand curve shape

 substitution effect: an increase in the number of goods

demand due to replacement
When demad
 Income effect: when the price decrease make other people
decrease
increase demand because ther are wealthy

 substitution effect: people will decrease their demand fot

When demad that goods because of subtition goods
 Income effect: everyone feels poorer for the item even
increase
though his money income does not change
 Market demand

The sum of all the demands faced by all individual firms (companies)

Jumlah yang diminta

Harga
Permintaan A Permintaan B Permintaan pasar
5000 10 10 20
4000 15 15 30
3000 30 20 50
2000 50 30 80
1000 70 45 115
 Effect of non-price

 Priceof other items : replacement item, complementary goods, neutral

goods
 Buyer income: inferior goods, essential goods, luxury goods
 Some other factor, income distribution
 Some aother factor; income distribution. Community taste, total
population, expectations about the future
 Movement along demand curve
Price

Movement along demand curve occure

5 P when the goods price demanded increase or
decrease

3 R

2 S
Do

Quantity
200 600 900
 Demand curve shift

Price

The cuve move to right or left if

there is change in demand
caused by a non price factor
A P2 Po P1

D1
Do
D2
Q2 Qo Q1 Quantity
Mathematic approach for demand
Q = f (P)
 Q= α – βP
 βP = α – Q
 P = α/β – 1/β Q P = 250 – 0,075Q
 P = a- BQ ( is called the inverse a = 250
acceptance function) b = -0,075
 a is an intercept
 b is and slope or the slope of the demand
curve(-b = dP/dQ)