Professional Documents
Culture Documents
BY :
AHMAD ISYROQI AKBAR
BOBBY CAHYADI
BIBIT SOFANI NGUSMAN
WHY ?
The driving force behind the market economics that exist in the world
A tool that managers can use to visualize the big picture
DEMAND
Quantities of goods or service consumers are willing and able to buy at different
possible prices
LAW OF DEMAND
THE QUANTITY OF GOODS OR SERVICES CONSUMERS ARE WILLING AND ABLE TO PURCHASE GOES DOWN
AS THE PRICES RISES
When price goes up.. Demand goes down.. When price goes down.. Demand goes up..
NOTE : holding consumer income, advertising, prices of related goods, population, consumer expectations, and other
variables constant.
DEMAND CURVE
Market demand curve :
D0
4 7 Quantity
CHANGES IN DEMAND CURVE..
CUSTOMERS INCOME EFFECT..
NORMAL GOOD INFERIOR GOOD
Income goes Demand Income goes Demand goes
up goes up up down
PRICES OF RELATED GOODS
1. SUBTITUTES EFFECT
GOODS FOR WHICH A INCREASE/DECREASE IN THE PRICE OF ONE GOOD LEADS TO AN INCREASE/DECREASE
IN THE DEMAND FOR OTHER GOOD.
Pepsi
Coke price demand
increase increase
PRICES OF RELATED GOODS
2. COMPLEMENTS GOOD
GOODS FOR WHICH AN INCREASE/DECREASE IN THE PRICE OF ONE GOOD LEADS TO A DECREASE/INCREASE IN THE DEMAND FOR OTHER GOOD
Jam
Breads
demand
price
decrease
increase
ADVERTISING
1. INFORMATIVE ADVERTISING
PROVIDES CONSUMERS WITH INFORMATION ABOUT THE EXISTENCE OR QUALITY OF A PRODUCT, WHICH IN
TURN INDUCES MORE CUSTOMERS TO BUY THE PRODUCT
2. PERSUASIVE ADVERTISING
INFLUENCE DEMAND BY ALTERING THE UNDERLYING TASTES OF CONSUMERS.
POPULATION
CONSUMERS EXPECTATIONS
STOCKPILING BEHAVIOR
DEMAND FUNCTION
A FUNCTION THAT DESCRIBES HOW MUCH OF A GOOD WILL BE PURCHASED AT ALTERNATIVE PRICES OF THAT GOOD AND
RELATED GOODS, ALTERNATIVE INCOME LEVELS, AND ALTERNATIVE VALUES OF OTHER VARIABLES AFFECTING DEMAND
1 2 3 4 Quantity
SUPPLY
MARKET SUPPLY CURVE SUMMARIES THE TOTAL QUANTITY ALL PRODUCERS ARE WILLING AND ABLE TO
PRODUCE AT ALTERNATIVE PRICES, HOLDING OTHER FACTORS THAT AFFECT SUPPLY CONSTANT.
Quantity
TECHNOLOGY OR GOVERNMENT REGULATION
Truck assembly
substitutes by car
assembly
TAXES
EXCISE TAX IS A TAX ON EACH
UNIT OF OUTPUT SOLD.
EFFECTS DECREASING OF A
GOOD SUPPLY
PRODUCER EXPECTATIONS
SELLING A UNIT OF OUTPUT TODAY AND SELLING A UNIT OF OUTPUT TOMORROW ARE SUBSTITUTES IN PRODUCTION
FUTURE PRICE
SELL PRODUCT
INCREASE !!!!!!
LATER
SUPPLY FUNCTIONS
DESCRIBES HOW MUCH OF A GOOD WILL BE PRODUCED AT
ALTERNATIVE PRICES OF THAT GOODS, ALTERNATIVE INPUT
PRICESS, AND ALTERNATIVE VALUES OF THE OTHER VARIBALES
AFFECTING SUPPLY.
SUPPLY FUNCTIONS
AN EQUATION REPRESENTING THE SUPPLY CURVE:
QXS = F(PX , PR ,W, H,)
P = PRICE OF GOOD X.
X
QxS = Qxd
MARKET EQUILIBRIUM
EXAMPLE
PRICE RESTRICTIONS
PRICE CEILINGS
THE MAXIMUM LEGAL PRICE THAT CAN BE CHARGED
EXAMPLE :
THE GOVERNMENT SET PRICE FOR GASOLINE PREMIUM GRADE IS RP 6650,00/LITER
PRICE FLOORS
THE MINIMUM LEGAL PRICE THAT CAN BE CHARGED
EXAMPLE :
MINIMUM WAGE. AGRICULTURAL PRICE SUPPORT
IMPACT OF A PRICE CEILING
Price S
PF
Pe
Ceiling
Price
Shortage D
Qs Qd Quantity
FULL ECONOMIC PRICE
THE DOLLAR AMOUNT PAID TO A FIRM UNDER A PRICE CEILING, PLUS THE NONPECUNIARY PRICE.
PF = Pc + (PF - PC)
EVENT: THE WSJ REPORTS THAT THE PRICES OF PC COMPONENTS ARE EXPECTED TO FALL BY 5-8
PERCENT OVER THE NEXT SIX MONTHS.