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THEORY OF DEMAND AND
SUPPLY
By kelompok 1B
ADITYA RAHMAN ( 022001801186)
ANDRI REYNALDI ZAGOTO
(022001801190)
Demand
WHAT IS DEMAND ? :
DEMAND IS THE DESIRE TO OWN ANYTHING,
THE ABILITY TO PAY FOR IT, AND
THE WILLINGNESS TO PAY DURING A SPECIFIC
PERIOD
Law of demand
 THE LAW OF DEMAND STATES THAT OTHER FACTORS
BEING CONSTANT, PRICE AND QUANTITY OF DEMAND
OF ANY GOOD AND SERVICE ARE INVERSELY RELATED
TO EACH OTHER.
 WHEN THE PRICE OF THE PRODUCT INCREASES, THE
DEMAND FOR THE SAME PRODUCT WILL FALL.
DEMAND CURVE:
GRAPHICALLY SHOWS THE RELATIONSHIPS
BETWEEN THE PRICE OF A GOOD AND THE QUANTITY
WITH ALL DEMANDED, HOLDING CONSTANT ALL
OTHER VARIABLES THAT INFLUENCES DEMAND.
0
0.5
1
1.5
2
2.5
3
0 0.5 1 1.5 2 2.5 3
Y-Values
Movement and Shifting demand curve
Changes occur for two main reasons, namely changes in the price
of the goods concerned and the other one is due to ceteris paribus
factors (factors other than the price of the goods themselves)
usually the buyer's income or market taste.
the only thing that makes the demand curve move is the price of
the item or the price of the item itself.
Supply
What is Supply?
 Supply is the quantity of goods a firm offers to sell in
the market at a given price. Now
the theory of supply states that with an increase in
price the number of goods a firm wishes to supply will
also increase.
Law of Supply
 Direct relationship between the price and quantity
supplied
 Increased price causes increased quantity supplied
 Decreased price causes decreased quantity supplied
 Related to cost-plus pricing model, i.e. as quantity
increases costs often increase so firm need a higher P
to increase Q.
SUPPLY CURVE
 THE GRAPHYCAL REPRESENTATION OF THE RELATION BETWEEN
THE QUANTITIES SUPPLY OF A GOOD THAT PRODUCERS ARE
WILLING AND ABLE TO SELL AND THE PRICE OF THE GOOD
 GRAPH CURVE THAT NORMALLY SLOPES UPWARD TO THE RIGHT
OF THE CHART, SHOWING THE QUANTITY OF THE PRODUCT
SUPPLIED AT DIFFERENT PRICE LEVELS
Price and quantity
supplied are positively
related.
Increase and decrease
DETERMINANT OF SUPPLY
 PRODUCTION COST
 TECHNOLOGY
 NUMBER OF SELLERS
 EXPECTATION
Any
question?
Thanks for your attention

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theory demand and supply

  • 1. THEORY OF DEMAND AND SUPPLY By kelompok 1B
  • 2. ADITYA RAHMAN ( 022001801186) ANDRI REYNALDI ZAGOTO (022001801190)
  • 4. WHAT IS DEMAND ? : DEMAND IS THE DESIRE TO OWN ANYTHING, THE ABILITY TO PAY FOR IT, AND THE WILLINGNESS TO PAY DURING A SPECIFIC PERIOD
  • 5. Law of demand  THE LAW OF DEMAND STATES THAT OTHER FACTORS BEING CONSTANT, PRICE AND QUANTITY OF DEMAND OF ANY GOOD AND SERVICE ARE INVERSELY RELATED TO EACH OTHER.  WHEN THE PRICE OF THE PRODUCT INCREASES, THE DEMAND FOR THE SAME PRODUCT WILL FALL.
  • 6. DEMAND CURVE: GRAPHICALLY SHOWS THE RELATIONSHIPS BETWEEN THE PRICE OF A GOOD AND THE QUANTITY WITH ALL DEMANDED, HOLDING CONSTANT ALL OTHER VARIABLES THAT INFLUENCES DEMAND. 0 0.5 1 1.5 2 2.5 3 0 0.5 1 1.5 2 2.5 3 Y-Values
  • 7. Movement and Shifting demand curve Changes occur for two main reasons, namely changes in the price of the goods concerned and the other one is due to ceteris paribus factors (factors other than the price of the goods themselves) usually the buyer's income or market taste. the only thing that makes the demand curve move is the price of the item or the price of the item itself.
  • 9. What is Supply?  Supply is the quantity of goods a firm offers to sell in the market at a given price. Now the theory of supply states that with an increase in price the number of goods a firm wishes to supply will also increase.
  • 10. Law of Supply  Direct relationship between the price and quantity supplied  Increased price causes increased quantity supplied  Decreased price causes decreased quantity supplied  Related to cost-plus pricing model, i.e. as quantity increases costs often increase so firm need a higher P to increase Q.
  • 11. SUPPLY CURVE  THE GRAPHYCAL REPRESENTATION OF THE RELATION BETWEEN THE QUANTITIES SUPPLY OF A GOOD THAT PRODUCERS ARE WILLING AND ABLE TO SELL AND THE PRICE OF THE GOOD  GRAPH CURVE THAT NORMALLY SLOPES UPWARD TO THE RIGHT OF THE CHART, SHOWING THE QUANTITY OF THE PRODUCT SUPPLIED AT DIFFERENT PRICE LEVELS
  • 12. Price and quantity supplied are positively related.
  • 14. DETERMINANT OF SUPPLY  PRODUCTION COST  TECHNOLOGY  NUMBER OF SELLERS  EXPECTATION
  • 16. Thanks for your attention