Online - Uwin.ac - Id: Bachelor in Economics (S.E) : Manajemen

Course : Pengantar Ilmu Ekonomi (1506PIE03)
online.uwin.ac.id
Bachelor in Economics (S.E): Manajemen
UWIN eLearning Program
Session Topic : Supply

Course: Pengantar Ilmu Ekonomi
By Tovan Krisdianto, S.E., M.M.
Content
Part 1
Supply & Demand
Part 2
Movement on Supply Curve
Part 3
Balance & Market Mechanism
Part 4
Summary
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- 1506PIE03-
S.3
Part1: Supply & Demand
Supply: Quantity & Law
Quantity supplied
Defn: The amount of a good that sellers are willing and able to
sell
Law of Supply
The law of supply states that there is a direct (positive) relationship
between,
a. Price and
b. Quantity
supplied.
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S.5
Supply: Determinants & Schedule
Determinants of Supply
1. Market price
2. Input Prices
3. Technology
4. Expectations
5. Number of producers
Supply Schedule
Defn: A Table that shows the
relationship between the,
a. Price of the good and
b. Quantity supplied.
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S.6
Supply: Schedule
Bens Supply Schedule

No
Price of IceCream Cone
Quantity of Cones
Demanded
Marginal
Price/Q
1.
$ 0.00
$ 0.00
2.
0.50
0.00
3.
1.00
1.00
4.
1.50
0.50
5.
2.00
0.67
6.
2.50
0.63
7.
3.00
0.60
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S.7
Supply Curve: Definition & Curve
Price of
Ice-Cream Cone
$3.00
2.50
1. An increase
in price 2.00
1.50
1.00
0.50
0
9 10 11 12
2. increases quantity of cones supplied.
Quantity of IceCream Cone
Supply Curve
Defn: The upward sloping line relating price to quantity supplied.
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S.8
Markets: Supply
Market Supply
Refers to the sum of all individual supplies for all sellers of a
particular,
Good or
Service.
Graphically,
individual supply curves are summed horizontally
to obtain the market supply curve.
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S.9
Market: Supply & Quantity Supplied
Market Supply
Refers to the sum of all individual supplies for all sellers of a
particular,
Good or
Service.
Graphically,
individual supply curves are summed horizontally
to obtain the market supply curve.
Change in Quantity Supplied versus Change in Supply
Change in Quantity Supplied,
Movement along the supply curve.
Caused by a change in the market price of the product.
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S.10
Markets: Supply & Demand
Price of
Ice-Cream
Cone
BEN
JERRY
$3.00
MAKET
2.50
2.00
1.50
1.00
0.50
0
9 10 11 12 13
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Quantity of Ice-Cream
Cones
S.11
Part2: Movement on Supply Curve
Market: Supply & Quantity Supplied

Change in Quantity Supplied,
Movement along the supply curve.
Caused by a change in the market price of the
product.
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S.13
Supply: Change in Quantity Supplied
Price of
Ice-Cream
Cone
S
C
$3.00
A rise,
in the price of ice
cream cones results in
a movement along
the supply curve.
1.00
0
1
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Quantity of
Ice-Cream
Cones
S.14
Supply: Determinants of Supply

Determinants of Supply
1. Market price
2. Input Prices
3. Technology
4. Expectations
5. Number of producers
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S.15
Supply: Change in Supply

Change in Supply,
A shift in the supply curve, either to the left or right.
Caused by a change in a determinant other than price.
Price of
Ice-Cream
Cone
$3.00
S3
S1
S2
Decrease in
Supply
2.50
2.00
Increase in
Supply
1.50
1.00
0.50
0
5 6
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9 10 11
Quantity of
Ice-Cream Cones
S.16
Supply: Variables that Influence Sellers
No
Variables that Affect

Quantity Supplied
A Change in This Variable
1.
Price
Represents a movement along the supply curve
2.
Input prices
Shifts the supply curve
3.
Technology
4.
Expectations
5.
Number of sellers
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S.17
Part3: Balance & Market Mechanism
Market Mechanism: Equilibrium
Equilibrium Price
The price that balances supply and demand.
On a graph, it is the price at which the supply and demand
curves intersect.
Equilibrium Quantity
The quantity that balances supply and demand.
On a graph, it is the quantity at which the supply and demand
curves intersect.
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S.19
Market Mechanism: Schedule
Supply and Demand Together

Demand Schedule
Supply Schedule
At $2.00, the quantity demanded is equal to the

quantity supplied!
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S.20
Market Mechanism: Equilibrium of Supply & Demand
Price of
Ice-Cream
Cone
Supply
$3.00
Equilibrium
2.50
2.00
1.50
1.00
0.50
0
5 6
- 1506PIE03-
9 10 11 12
Demand
Quantity of
Ice-Cream
Cones
S.21
Market Mechanism: Excess Supply
Price of
Ice-Cream
Cone
Surplus
$3.00
Supply
2.50
2.00
1.50
1.00
Demand
0.50
0
7 8 9 10
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11 12
Quantity of
Ice-Cream
Cones
S.22
Equilibrium: Surplus
Surplus
When the price is above the equilibrium price, the quantity
supplied exceeds the quantity demanded.
There is excess supply or a surplus.
Suppliers will lower the price to increase sales, thereby moving
toward equilibrium.
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S.23
Equilibrium: Excess Demand
Price of
Ice-Cream
Cone
Supply
$2.00
$1.50
Shortage
2 3 4
Quantity
Supplied
Demand
7 8 9 10 11 12 13
Quantity
Demanded
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Quantity of
Ice-Cream
Cones
S.24
Equilibrium: Shortage & 3 Steps
Shortage
When the price is below the equilibrium price, the quantity
demanded exceeds the quantity supplied.
There is excess demand or a shortage.
Suppliers will raise the price due to too many buyers chasing too
few goods, thereby moving toward equilibrium.
3 Steps to Analyzing Changes in Equilibrium
Decide whether the,
a. event shifts the supply or demand curve (or both).
b. curve(s) shift(s) to the left or to the right.
c. Examine how the shift affects equilibrium price and quantity.
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S.25
Equilibrium: How an Increase in Demand Affects the Equilibrium
Price of
Ice-Cream
Cone
1. Hot weather increases

the demand for ice cream...
Supply
New equilibrium
$2.50
2.00
2. ...resulting
in a higher
price...
Initial
equilibrium
D2
D1
3. ...and a higher
quantity sold.
10
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Quantity of
Ice-Cream Cones
S.26
3 Steps: Analyzing Changes in Equilibrium
Shifts in Curves versus Movements along Curves
A shift in the,
a. supply curve is called a change in supply.
b. demand curve is called a change in demand.
A movement along a fixed,
c. supply curve is called a change in quantity supplied.
d. demand curve is called a change in quantity demanded.
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S.27
Equilibrium: How a Decrease in Supply Affects the Equilibrium
Price of
Ice-Cream
Cone
S2
1. An earthquake reduces
the supply of ice cream...
S1
New
equilibrium
$2.50
2.00
Initial equilibrium
2. ...resulting
in a higher
price...
Demand
1 2 3 4
8 9 10 11 12 13
3. ...and a lower
quantity sold.
- 1506PIE03-
Quantity of
Ice-Cream
Cones
S.28
Supply & Demand: Price & Quantity
What Happens to Price & Quantity When Supply or Demand Shifts?
- 1506PIE03-
S.29
Part4: Summary
Summary: Supply
a. The supply curve

shows how the quantity of a
good supplied
depends upon the price.
d.
Market equilibrium is
determined by the intersection
of the supply and demand
curves.
b. According to the law of supply,

as the price of a good rises,
the quantity supplied rises.
e.
c.
Supply and demand together

determine,
the prices of the economys
goods and
services.
In addition to price,
other determinants of quantity
supplied
include input prices,
technology, and expectations.
f.
- 1506PIE03-
In market economies, prices are

the signals that guide the
allocation of resources.
S.31
Demand & Supply: How an Increase in Demand Affects the Equilibrium
Price of
Ice-Cream
Cone
Supply
2.00
Initial
equilibrium
D1
0
10
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Quantity of
Ice-Cream Cones
S.32
Demand & Supply: How an Increase in Demand Affects the Equilibrium (Cont.)

Price of
Ice-Cream
Cone
Supply
2.00
Initial
equilibrium
D1
0
10
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Quantity of
Ice-Cream Cones
S.33

Price of
Ice-Cream
Cone
Supply
New equilibrium
$2.50
2.00
Initial
equilibrium
D2
D1
0
10
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Quantity of
Ice-Cream Cones
S.34

Price of
Ice-Cream
Cone
Supply
$2.50
New equilibrium
2.00
2. ...resulting
in a higher
price...
Initial
equilibrium
D2
D1
0
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10
Quantity of
Ice-Cream Cones
S.35

Price of
Ice-Cream
Cone
Supply
$2.50
New equilibrium
2.00
2. ...resulting
in a higher
price...
Initial
equilibrium
D2
D1
0
7
3. ...and a higher
quantity sold.
- 1506PIE03-
10
Quantity of
Ice-Cream Cones
S.36
Demand & Supply: How a Decrease in Supply Affects the Equilibrium
Price of
Ice-Cream
Cone
S1
Initial equilibrium
2.00
Demand
0 1
8 9 10 11 12 13
Quantity of
Ice-Cream Cones
- 1506PIE03-
S.37
Demand & Supply: How a Decrease in Supply Affects the Equilibrium (Cont.)
Price of
Ice-Cream
Cone
1. An earthquake reduces the supply

of ice cream
S1
Initial equilibrium
2.00
Demand
0 1
8 9 10 11 12 13
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Quantity of
Ice-Cream Cones
S.38
Price of
Ice-Cream
Cone

of ice cream
S1
Initial equilibrium
2.00
Demand
0 1
8 9 10 11 12 13
Quantity of
Ice-Cream Cones
- 1506PIE03-
S.39
Price of
Ice-Cream
Cone

of ice cream
S1
New
equilibrium
Initial equilibrium
$2.50
2.00
Demand
0 1 2 3 4 5 6 7 8 9 10 11 12 13
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Quantity of
Ice-Cream Cones
S.40
Price of
Ice-Cream
Cone

of ice cream
S1
New
equilibrium
Initial equilibrium
$2.50
2.00
2. ...resulting
in a higher
price...
Demand
0 1 2 3 4 5 6 7 8 9 10 11 12 13
- 1506PIE03-
Quantity of
Ice-Cream Cones
S.41
Price of
Ice-Cream
Cone

of ice cream
S1
New
equilibrium
Initial equilibrium
$2.50
2.00
2. ...resulting
in a higher
price...
Demand
0 1 2 3 4
7 8 9 10 11 12 13
3. ...and a lower
quantity sold.
- 1506PIE03-
Quantity of
Ice-Cream Cones
S.42
Reference
1. Mankiw (2004) The Market Forces of Supply and

Demand. Web: mankiw.swlearning.com.
- 1506PIE03-
S.43
Course : Pengantar Ilmu Ekonomi (1506PIE03)
online.uwin.ac.id
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Online - Uwin.ac - Id: Bachelor in Economics (S.E) : Manajemen

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Course : Pengantar Ilmu Ekonomi (1506PIE03)

UWIN eLearning Program

Session Topic : Supply

Supply & Demand

Movement on Supply Curve

Balance & Market Mechanism

Part1: Supply & Demand

Supply: Quantity & Law

Supply: Determinants & Schedule

Bens Supply Schedule

Price of IceCream Cone

Supply Curve: Definition & Curve

2. increases quantity of cones supplied.

Quantity of IceCream Cone

Market: Supply & Quantity Supplied

Markets: Supply & Demand

Part2: Movement on Supply Curve

Market: Supply & Quantity Supplied

Change in Quantity Supplied versus Change in Supply

Supply: Change in Quantity Supplied

Supply: Determinants of Supply

Change in Quantity Supplied versus Change in Supply

Supply: Change in Supply

Change in Quantity Supplied versus Change in Supply

Supply: Variables that Influence Sellers

Variables that Affect

A Change in This Variable

Represents a movement along the supply curve

Shifts the supply curve

Shifts the supply curve

Shifts the supply curve

Shifts the supply curve

Part3: Balance & Market Mechanism

Market Mechanism: Equilibrium

Market Mechanism: Schedule

Supply and Demand Together

At $2.00, the quantity demanded is equal to the

Market Mechanism: Equilibrium of Supply & Demand

Market Mechanism: Excess Supply

Equilibrium: Excess Demand

Equilibrium: Shortage & 3 Steps

Equilibrium: How an Increase in Demand Affects the Equilibrium

1. Hot weather increases

3 Steps: Analyzing Changes in Equilibrium

Shifts in Curves versus Movements along Curves

Equilibrium: How a Decrease in Supply Affects the Equilibrium

Supply & Demand: Price & Quantity

What Happens to Price & Quantity When Supply or Demand Shifts?

a. The supply curve

b. According to the law of supply,

Supply and demand together

In market economies, prices are

Demand & Supply: How an Increase in Demand Affects the Equilibrium

1. Hot weather increases

1. Hot weather increases

1. Hot weather increases

1. Hot weather increases

Demand & Supply: How a Decrease in Supply Affects the Equilibrium

1. An earthquake reduces the supply

1. An earthquake reduces the supply

1. An earthquake reduces the supply

1. An earthquake reduces the supply

1. An earthquake reduces the supply