Microeconomic Insights : The Law of Demand, Determinants, Demand Function

and Demand Curve

Introduction to Micro Economics

EKU 111E

Group 02

Made Nanda Septa Putra (01)

I Dewa Gede Radhitya (03)

 Chapter I

Introduction

Demand, demand is quantity. In other perspective demand are amount, the

amount that buyers purchase, and or willing to be purchased. In demand price and
quantity are the main role, for the examples if one cut of a T-shirt rose up to Rp.
500.000,00 the demands for the t shirt will fell off and vice versa if the price for one cut
of a T-shirt fell off to Rp. 50.000,00 the demanding price for that particular goods will
sky rocketing.

In microeconomics, the Law of Demand is a fundamental principle. It simply

means that when the price of a product goes up, people tend to buy less of it, and when
the price goes down, they buy more. This principle is crucial in understanding how
consumers make choices. There are two main things that affect demand, price and the
availability of the product. When one of these goes up, the other usually goes down. This
has a big impact on what people choose to buy and how markets work. However,
demand isn't just about how much of something people want to buy. It also affects the
price of things, shows us how much we value certain products, and tells us what
consumers like. To help us understand these relationships, economists use something
called a Demand Curve. In this exploration, we'll break down these ideas, uncovering
the complexity that guides small scale economic choices, consumer decisions, and
market behaviour.
 Chapter II

Subtopics

2.1 The Law of Demand

The relationship between the price asking and quantity demanded are called the
law of demand, when the price rises the quantity demanded falls and vice versa until
being equal. This also means that the consumers will demanding more of a good if the
price decreased and if the prices increased the demands will be decreased. Market
demand is the summarize of 2 or more individual demand, market demand resulting
market prices.

The Law of Demand is a foundational concept in economics and plays a crucial role
in understanding how changes in prices, consumer preferences, and market dynamics
affect the quantity of goods and services that people are willing and able to buy.

2.2 The Determinant of Demand

As per the introduction above and the law of demand we can conclude that the
determinant of demand is two, which are prices and quantity, this determinant is in
bound with one and another such as if one of the determinant are increased the other
determinant will decreased or falling.

Determinants of demand refer to the factors that influence the quantity of a good
or service that consumers are willing and able to purchase at a given price. The
determinants of demand can vary depending on the context and the specific good or
service being considered.

2.3 Demand Function

A demand function is a mathematical equation that describes the relationship

between the quantity of a good or service that consumers are willing to buy and the
factors that influence their buying decisions. The demand function is a key component
in business simulations, which are useful tools for management decision making. In
smart grid systems, demand response programs use demand functions to model the
interaction between utility companies and customers.

Demand functions can take various forms, including linear, logarithmic, or more
complex functional forms, depending on the specific economic model or context being
studied. These functions are essential tools for conducting economic analysis, market
research, and making informed decisions about pricing, production, and marketing
strategies.

2.4 Demand Curve

A demand curve is a graphical representation of the relationship between the

price of a product or service and the quantity demanded by consumers in a given
market, holding all other factors constant. In other words, it shows how the quantity
demanded of a product or service changes as its price changes, assuming that all other
factors affecting demand, such as consumer incomes and preferences, remain the same.

Demand curves are essential tools in microeconomics and are used to analyse and
visualize how changes in price influence consumer behaviour and market dynamics.
They help businesses, policymakers, and economists understand the price and quantity
dynamics of products and make informed decisions about production, pricing
strategies, and market interventions.

There are two types of demanding curves such as:

2.4.1 Individual Curves, a curve that describing personal demand values.

2.4.2 Market Curves, the summarize of two or more of individual curves.

2.5 Demand Variations

Two figures of demand by income:

2.5.1 Normal good, the demands for the goods fell off if the income decreased.
2.5.2 Inferior good, the demands for the goods rises if the income decreased.
In the other hand there are substitute and complement. Substitute are two goods that
related with one and another, if there are a fall in the price of one good it will reduces
the demands for another good. Complements are paired goods that chained with one
and another such as gasoline and cars, compliments can be indicate with if a fall in one
good raise the demand of the other good that paired with.
 Chapter III

Conclusion

In conclusions demand are amount, the amount that buyers purchase, and or
willing to be purchased. In microeconomics, the Law of Demand is a fundamental
principle. It simply means that when the price of a product goes up, people tend to buy
less of it, and when the price goes down, they buy more. when the price rises the
quantity demanded falls and vice versa until being equal. This also means that the
consumers will demanding more of a good if the price decreased and if the prices
increased the demands will be decreased. The determinant of demand is two, which are
prices and quantity, this determinant is in bound with one and another such as if one of
the determinants are increased the other determinant will be decreased or falling.
Demand function is a mathematical equation that describes the relationship between
the quantity of a good or service that consumers are willing to buy and the factors that
influence their buying decisions. Demand divided into various variation such; by
income, price related, tastes, expectations, and the number of buyers.
 Chapter IV

Reference

Becker, G. (2015). Law of Demand. Managerial Economics. Retrivied from

https://www.semanticscholar.org/paper/Law-of-Demand-Becker/afa974d73a5
1d87aebcc8a9265dd9bc25026947b#related-papers
Mankiw, G. (2019). Principles of Economics. Boston: Cengage.