This document discusses market equilibrium between demand and supply. It defines key concepts like market, demand, supply, demand curves, supply curves, and equilibrium. The equilibrium price and quantity occur where the demand and supply curves intersect, and where the quantity demanded equals the quantity supplied. An example equilibrium calculation is shown using algebraic demand and supply functions. The concepts are illustrated with graphs of the demand curve, supply curve, and equilibrium point.

1. MICROECONOMICS
MARKET EQUILIBRIUM (DEMAND
AND SUPPLY)
Vadilla Mutia Zahara SE.,
ME

2. CONCEPTUAL FRAMEWORK
THE MARKET EQUILIBRIUM
(DEMAND AND SUPPLY)

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

4. 4
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.

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

6. 6
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

7. 7
DEMAND CURVE
$3.00
2.50
2.00
1.50
1.00
0.50
21 3 4 5 6 7 8 9 10 1211
Price
Quantity
0
Harga Kuantitas
$0.00 12
0.50 10
1.00 8
1.50 6
2.00 4
2.50 2
3.00 0

8. 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.

9. 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

10. 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

11. 11
MOVEMENT ALONG THE
CURVE OR SHIFT IN DEMAND
CURVE
0
D1
Price
Quantity
D3
D2
Increase
demand
Decrease
Demand

12. 12
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

13. 13
SUPPLY CURVE
$3.00
2.50
2.00
1.50
1.00
0.50
21 3 4 5 6 7 8 9 10 1211
Price
Quantity
0
Harga Kuantitas
$0.00 0
0.50 0
1.00 1
1.50 2
2.00 3
2.50 4
3.00 5

14. 14
MOVEMENT ALONG THE
CURVE OR SHIFT IN SUPPLY
CURVE
Price
Quantity
0
S1
S2
S3
Increase in
supply
Decrease in
supply

15. 15
DEMAND SUPPLY
EQUILIBRIUM
Equilibrium
It is Price and Quantity that balance supply and
demand

16. 16
EQUILIBRIUM
Harga Kuantitas
$0.00 0
0.50 0
1.00 1
1.50 4
2.00 7
2.50 10
3.00 13
Harga Kuantitas
$0.00 19
0.50 16
1.00 13
1.50 10
2.00 7
2.50 4
3.00 1
Demand Schedule Supply Schedule
At $ 2.00, quantity demand is the same as
the quantity supply!

17. 17
Supply
Demand
Price
Quantity
EQUILIBRIUM CURVE
21 3 4 5 6 7 8 9 10 12110
$3.00
2.50
2.00
1.50
1.00
0.50
Equilibrium

18. 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)

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

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

21. KURVA
QSX = -10 + 4P
QSX = 0
0 = -10/-4
P = 2,5
P = 0
QSX = -10 + 4(0)
Q = -10
-15 -10 -5 0 5 10 15 20 25
30 35
P
Q
2,5
5
4
6
Qs = -10 + 4P
Qd = 30 – 6P
E(6,4)