The Market Forces of Supply and Demand
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The Market Forces of
Supply and Demand
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Member of Group
Arisa Aqmarina
Adistia D.K
Dimas Aji S.
Hashfi Hawali
Irham Auliya A. M. Ferry R.
Jayanti M.
Rahmat Tubaus
!atri"ia #.
Astrid !ardede
Jalu Arthawidya
Maria Faustina $%friani S.
Mutiara Adella
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Markets
A mar&et is a r%u' %f buyers and sellers %f
a 'arti"ular %%d %r ser(i"e. The terms su''ly and demand refer t% the
beha(i%r %f 'e%'le . . . as they intera"t with%ne an%ther in mar&ets.
And )"%n%mi"s* es'e"ially Mi"r%e"%n%mi"sis ab%ut h%w su''ly and demand intera"t inmar&ets.
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Market Types or Structures
#%m'etiti(e Mar&ets
!r%du"ts are the same*'ri"e ta&ers
M%n%'%ly
M%n%'%listi" #%m'etiti%n
+li%'%ly
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Demand Curve
$3.002.5
02.001.50
1.00
0.50
21 3 4 5 6 7 8 9 10
12
11
Price of
Ice-CreamCone
Quantity
of Ice-Cream
0
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Why does the Demand
Curve Slope Downward? ,aw %f Demand
In(erse relati%nshi' between 'ri"e and
quantity.
,aw %f Diminishin Marinal -tility.
-tility is the etra satisfa"ti%n that %ne
re"ei(es fr%m "%nsumin a 'r%du"t.Marinal means etra.
Diminishin means de"reasin.
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Market Demand
Mar&et demand refers t% the sum %f all
indi(idual demands f%r a 'arti"ular
%%d %r ser(i"e.
/ra'hi"ally* indi(idual demand "ur(es
are summed horizontally t% %btain the
mar&et demand "ur(e.
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Ceteris aribus
Ceteris paribus is a ,atin 'hrase that
means all (ariables %ther than the
%nes bein studied are assumed t% be
"%nstant. ,iterally* ceteris paribus
means 0%ther thins bein equal.1
The demand curve slopes downward
because! ceteris paribus! lower prices
imply a "reater #uantity demanded$
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Determinants of Demand
Mar&et 'ri"e
#%nsumer in"%me
!ri"es %f related %%ds
Tastes
)'e"tati%ns 2hat are s%me eam'les3
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Consumer %ncome&ormal Good
$3.002.5
02.001.50
1.00
0.50
21 3 4 5 6 7 8 9 10
12
11
Price of
Ice-CreamCone
Quantity
of Ice-Cream
0
Increasein eman
!nincrease
inincome...
D4
D5
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Consumer %ncome%nferior Good
$3.002.5
02.001.50
1.00
0.50
21 3 4 5 6 7 8 9 10
12
11
Price of
Ice-CreamCone
Quantity
of Ice-Cream
0
"ecreasein eman
!n
increasein
income...
D4D5
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rices of 'elated Goods
Substitutes ( Complements2hen a fall in the 'ri"e %f %ne %%d
redu"es the demand f%r an%ther %%d*
the tw% %%ds are "alled substitutes .2hen a fall in the 'ri"e %f %ne %%d
in"reases the demand f%r an%ther
%%d* the tw% %%ds are "alled
"%m'lements .
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Supply Curve
$3.002.5
02.00
1.50
1.00
0.50
21 3 4 5 6 7 8 9 10
12
11
Price of
Ice-CreamCone
Quantity
of Ice-Cream
0
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)aw of Supply
The law %f su''ly states that there is a
direct (positive) relationship between'ri"e and quantity su''lied.
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Chan"e in *uantity Supplied
1 5
Price ofIce-CreamCone
Quantity
of Ice-Cream
0
S
1.00
!
C$3.0
0
A rise in the 'ri"e
%f i"e "ream "%nesresults in a
m%(ement al%n
the su''ly "ur(e .
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Market Supply
Mar&et su''ly refers t% the sum %f
all indi(idual su''lies f%r all sellers
%f a 'arti"ular %%d %r ser(i"e.
/ra'hi"ally* indi(idual su''ly
"ur(es are summed horizontally t%%btain the mar&et su''ly "ur(e.
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Determinants of Supply
Mar&et 'ri"e
In'ut 'ri"esTe"hn%l%y
)'e"tati%ns
$umber %f 'r%du"ers
2hat are s%me eam'les3
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#u%y
"eman
Price ofIce-CreamCone
Quantity
of Ice-Cream
+#uilibrium of
Supply and Demand
21 3 4 5 6 7 8 9 10 12110
$3.00
2.502.00
1.5
01.00
0.50
&'ui%i(rium
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Price ofIce-CreamCone
Quantity
of Ice-Cream
21 3 4 5 6 7 8 9 10
12110
$3.00
2.50
2.00
1.5
01.00
0.50
#u%y
"eman
#ur%us
+,cess Supply
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+,cess Demand
Quantity of Ice-Cream Cones
Price of Ice-Cream
Cone
$2.00
0 1 2 3 4 5 6 7 8 9 10 11 12 13
#u%y
"eman
$1.50
#)orta*e