Raymond Binsar Pandiangan - MM EM 18 A

PPM School of Management

13. Suppose that the demand and supply functions for good X are

Qd= 50-8P

Qs= -17.5 + 10P

a. Equilibrium price and quantity :

Table 1 Market Equilibrium

(1) (2) (3) (4)

Excess supply (+)
D0 S0 or
Price
Quantity supplied Quantity demanded excess demand (-)
Qs = -17.5 + 10P Qd = 50-8P Qs-Qd
$1.75 0 36 -36
$2.00 3 34 -32
$2.25 5 32 -27
$2.50 8 30 -23
$2.75 10 28 -18
$3.00 13 26 -14
$3.25 15 24 -9
$3.50 18 22 -5
$3.75 20 20 0
$4.00 23 18 5
$4.25 25 16 9
$4.50 28 14 14
$4.75 30 12 18
$5.00 33 10 23
$5.25 35 8 27
$5.50 38 6 32
$5.75 40 4 36
$6.00 43 2 41
$6.25 45 0 45
 Demand, Supply, and Market Equilibrium
$7.00
$6.25 $6.25
$6.00 $6.00
$6.00 $5.75 $5.75
$5.50 $5.50
$5.25 $5.25
$5.00
$5.00 $4.75 $4.75
$4.50 $4.50
$4.25 $4.25
$4.00 $4.00
Price (dollars)

$3.75
$4.00 $3.75
$3.50 $3.50
$3.25 $3.25
$3.00 $3.00
$2.75 $3.00 $2.75
$2.50 $2.50
$2.25 $2.25
$2.00 $2.00
$1.75 $2.00 $1.75

$1.00

$0.00
-30 -20 -10 0 10 20 30 40
Quantity (Qd and Qs)

Quantity supplied Quantity demanded Linear (Quantity supplied)

Gambar 1 Market Equilibrium

b. What is the market outcome if price is $2.75 ? What do you expect to happen?
Why?
Pada Tabel 1, jika harga pasar $2.75, maka demand pada posisi 28 dan supply 10.
Jika kondisi dimana Demand > Supply disebut dengan Excess Demand (Shortage).
Hal ini akan mengakibatkan kelangkaan barang di pasar.

c. What is the market outcome if price is $4.25? What do you expect to happen?
Why?
Pada Tabel 1, jika harga pasar $4.25, maka demand pada posisi 16 dan supply 25.
Jika kondisi dimana Demand < Supply disebut dengan Excess Supply (Surplus).
Hal ini akan mengakibatkan barang di pasaran dengan mudah didapat, dikarenakan
ketersediaan barang lebih banyak daripada permintaan.

d. What happens to equilibrium price and quantity if the demand function becomes
Qd= 59-8P?
 Table 2 Market Equilibrium

(1) (2) (3) (4)

D0 S0 Excess supply (+) or
Price Quantity supplied Quantity demanded excess demand (-)
Qs = -17.5 + 10P Qd = 50-8P Qs-Qd
$1.75 0 45 -45
$2.00 3 43 -41
$2.25 5 41 -36
$2.50 8 39 -32
$2.75 10 37 -27
$3.00 13 35 -23
$3.25 15 33 -18
$3.50 18 31 -14
$3.75 20 29 -9
$4.00 23 27 -5
$4.25 25 25 0
$4.50 28 23 5
$4.75 30 21 9
$5.00 33 19 14
$5.25 35 17 18
$5.50 38 15 23
$5.75 40 13 27
$6.00 43 11 32
$6.25 45 9 36

Demand, Supply, and Market Equilibrium

$7.00$6.25 $6.25
$6.00
$5.75 $6.00
$5.75
$6.00 $5.50
$5.25 $5.50
$5.25
$5.00
$4.75 $4.75
$5.00 $4.25 $4.50 $4.50
$4.25
Price (dollars)

$4.00
$3.75 $4.00
$3.75
$3.50
$4.00
$3.25 $3.50
$3.25
$3.00
$2.75 $3.00
$2.75
$2.50
$2.25 $3.00 $2.50
$2.25
$2.00
$1.75 $2.00
$1.75
$2.00
$1.00
$0.00
-30 -20 -10 0 10 20 30 40
Quantity (Qd and Qs)

Quantity supplied Quantity demanded Linear (Quantity supplied)

Gambar 2 Market Equilibrium

 Dengan perubahan Demand Function dimana intercept parameter nya lebih besar,
maka mengakibatkan titik euilibrium price bergeser dari $3.75 menjadi $4.25.
Dengan bergeser nya titik euilibrium price juga mengakibatkan bergesernya
Demand dan Supply, dari 20 menjadi 25.

e. What happens to equilibrium price and quantity if the supply function becomes
Qs=-40 + 10P (demand is Qd= 50-8P)?

Tabel 3 Market Equilibrium

(1) (2) (3) (4)

Excess supply (+)
D0 S0 or
Price Quantity
Quantity supplied demanded excess demand (-)
Qs = -17.5 + 10P Qd = 50-8P Qs-Qd
$1.75 -23 36 -59
$2.00 -20 34 -54
$2.25 -18 32 -50
$2.50 -15 30 -45
$2.75 -13 28 -41
$3.00 -10 26 -36
$3.25 -8 24 -32
$3.50 -5 22 -27
$3.75 -3 20 -23
$4.00 0 18 -18
$4.25 3 16 -14
$4.50 5 14 -9
$4.75 8 12 -5
$5.00 10 10 0
$5.25 13 8 5
$5.50 15 6 9
$5.75 18 4 14
$6.00 20 2 18
$6.25 23 0 23
 Demand, Supply, and Market Equilibrium
$7.00
$6.25 $6.25
$6.00 $6.00
$6.00 $5.75 $5.75
$5.50 $5.50
$5.25 $5.25
$5.00
$5.00 $4.75 $4.75
$4.50 $4.50
$4.25 $4.25
$4.00 $4.00
Price (dollars)

$3.75
$4.00 $3.75
$3.50 $3.50
$3.25 $3.25
$3.00 $3.00
$2.75 $3.00 $2.75
$2.50 $2.50
$2.25 $2.25
$2.00 $2.00
$1.75 $2.00 $1.75

$1.00

$0.00
-30 -20 -10 0 10 20 30 40
Quantity (Qd and Qs)

Quantity supplied Quantity demanded Linear (Quantity supplied)

Gambar 3 Market Equilibrium

Dengan perubahan Supply Function dimana intercept parameter nya lebih kecil,
maka mengakibatkan titik euilibrium price bergeser dari $3.75 menjadi $5. Dengan
bergeser nya titik equilibrium price juga mengakibatkan bergesernya Demand dan
Supply, dari 20 menjadi 10.