Ekonomi Manajerial

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Program Studi Manajemen Rekayasa

Market
A market is any place where the sellers of a particular
good or service can meet with the buyers of that goods
and service where there is a potential for a transaction
to take place. The buyers must have something they can
offer in exchange for there to be a potential transaction.

Competitive Market
Competitive market in which there are many buyers and
many sellers so that each has a negligible impact on the
market price
Characteristics :
(1) the goods offered for sale are all exactly the same
(2) the buyers and sellers are so numerous that no
single buyer or seller has any influence over the
market price.

Theory of Demand and Supply

The theory of demand and supply is a simple example of an
economic theory
It can be used to make predictions about the price and
quantity of some commodity
In a free-market economy, most economic decisions are
guided by prices
Therefore, without a reliable theory of prices, you will get
nowhere in economic analysis

Demand
Quantity demanded is the amount of a good that buyers are
willing and able to purchase
Demand is a full description of how the quantity demanded
changes as the price of the good changes.

Catherines Demand Schedule and Demand Curve

Catherines Demand Schedule and Demand Curve

The total quantity of a good all consumers
are willing and able to purchase at each
possible price, holding the prices of related
goods, income, advertising, and other
variables constant.

Price of
Ice-Cream Cone
$3.00
2.50
1. A decrease
in price ...

2.00
1.50
1.00
0.50
6 7 8 9 10 11 12 Quantity of
Ice-Cream Cones
2. ... increases quantity
of cones demanded.

0 1 2 3 4 5

Market Demand is the Sum of Individual

Demands

Law of Demand

The quantity demanded of a good falls when the price

of the good rises, and vice versa, provided all other
factors that affect buyers decisions are unchanged
(ceteris paribus)

Demand Shifters
Economists recognize that variables other than the price of a
good influence demand which is called demand shifters
(consumer income, prices of related goods, advertising and
consumer tastes, population, and consumer expectations)
Change in quantity demanded is changes in the price of a good
lead to a change in the quantity demanded of that good. This
corresponds to a movement along a given demand curve.
Change in demand is changes in variables other than the price
of a good, such as income or the price of another good, lead to
a change in demand. This corresponds to a shift of the entire
demand curve.

Demand Shifters (Cont.)

Demand Shifters (Cont.)

1. Consumer income
a. Normal goods
b. Inferior goods
2. Prices of related goods
a. Substitutes
b. Complement
3. Advertising and consumer tastes
a. Informative advertising
b. Persuasive advertising
4. Composition in population
5. Consumers expectations

Advertising

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.
= ( , , , )
= 0 + + + +

Demand Function (Case Study)

An economic consultant for X Corp. recently provided the firms
marketing manager with this estimate of the demand function
for the firms product:
= 12000 3 + 4 1 + 2
where represents the amount consumed of good X, is the
price of good X, is the price of good Y, M is income, and
represents the amount of advertising spent on good X. Suppose
good X sells for $200 per unit, good Y sells for $15 per unit, the
company utilizes 2000 units of advertising, and consumer
income is $10,000. How much of good X do consumers
purchase? Are goods X and Y substitutes or complements? Is
good X a normal or an inferior good?

Supply
Quantity supplied is the amount of a good that sellers are willing
and able to sell
Supply is a full description of how the quantity supplied of a
commodity responds to changes in its price

Bens Supply Schedule and Supply Curve

Price of
Ice-cream cone

Quantity of
Cones supplied

$0.00
0.50
1.00
1.50
2.00
2.50
3.00

0 cones
0
1
2
3
4
5

Bens Supply Schedule and Supply Curve

Price of
Ice-Cream
Cones
$3.00
2.50

Supply curve
1. An increase
in price . . .

2.00
1.50
1.00

2. . . . increases quantity
of cones supplied.

0.50

1 2 3 4 5 6 7 8 9 10 11 12
Quantity of Ice-Cream Cones

A curve indicating the total

quantity of a good that all
producers in a competitive
market would produce at each
price, holding input prices,
technology, and other variables
affecting supply constant.

Market Supply and Individual Supply

Price of
Ice
Cream
Cones
$3.00

Bens
supply

SBen

Price of
Ice
Cream
Cones
$3.00

Jerrys
supply

=
Price of
Ice
Cream
Cones

SJerry

$3.00

2.50

2.50

2.50

2.00

2.00

2.00

1.50

1.50

1.50

1.00

1.00

1.00

0.50

0.50

0.50

1 2 3 4 5 6 7 8 9 10 11 12
Quantity of Ice-Cream Cones

1 2 3 4 5 6 7
Quantity of
Ice-Cream Cones

Market
supply

SMarket

2 4 6 8 10 12 14 16 18
Quantity of Ice-Cream Cones

Law of Supply

As the price of a good rises (falls) and other things remain

constant, the quantity supplied of the good rises (falls).
Producers are willing to produce more output when the price is
high than when it is low

Supply Shifters
Variables that affect the position of the supply curve and they
include the prices of inputs, the level of technology, the
number of firms in the market, taxes, and producer
expectations.
Change in quantity supplied is changes in the price of a good
lead to a change in the quantity supplied of that good. This
correspond to a movement along a given supply curve.

Change in supply is changes in variables other than the price of

a good, such as input prices or technological advances, lead to
a change in supply. This corresponds to a shift of the entire
supply curve.

Supply Shifters (Cont.)

Supply Shifters (Tax)

Supply Function
Supply function is a function that describes how much of a
good will be produced at alternative prices of that good,
alternative input prices, and alternative values of other
variables affecting supply.

= ( , , , )
= 0 + + + W+ H

Supply Function (Case Study)

Your research department estimates that the supply function for
television sets is given by
= 2000 + 3 4
where is the price of TV sets, represents the price of a
computer monitor, and is the price of an input used to make
television sets. Suppose TVs are sold for $400 per unit, computer
monitors are sold for $100 per unit, and the price of an input is
$2,000. How many television sets are produced?

Market Equilibrium
We assume that the price will automatically reach a level at
which the quantity demanded equals the quantity supplied
Demand Schedule

Supply Schedule

At $2.00, the quantity demanded is equal to the

quantity supplied!

Market 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

D
D
0

10

3. . . . and a higher
SUPPLY AND DEMAND
quantity sold.

Quantity of
Ice-Cream Cones
29

Decrease in Supply Affects the Equilibrium

Price of
Ice-Cream
Cone
S2

1. An increase in the
price of sugar reduces
the supply of ice cream. . .
S1

New
equilibrium

$2.50

Initial equilibrium

2.00
2. . . . resulting
in a higher
price of ice
cream . . .

Demand

7
3. . . . and a lower
SUPPLY AND
DEMAND
quantity
sold.

Quantity of
Ice-Cream Cones
30