THE OPPORTUNITY COST OF COASTAL GROUP 2

LAND-USE CONTROLS : AN EMPIRICAL DIAN WIJAYANTI

ANALYSIS EVA HESTIAN
DOSEN PENGAMPU : IBU EVI PRA-MBA REG 46
 INTRODUCTION
The Opportunity Cost of Coastal Land-Use Controls: An
Empirical Analysis
Author(s): George R. Parsons and Yangru Wu
Source: Land Economics, Vol. 67, No. 3 (Aug., 1991), pp.
308-316
Published by: University of Wisconsin Press
 BACKGROUND
 There is the trend (The migration of the U.S. population from interior to coastal states)
will persist has led to concern about increased housing and commercial development in
coastal areas. Added development brings water pollution and reduces the natural
cover of the coastline.
 Solution : Land-use controls that limit new residential and commercial development on
land adjacent to coastal water.
 This control have essentially three economic efficiency effects :
1) On the positive side, is the preservation of coastal open space and reduction of
water pollutants-benefits enjoyed by residents and visitor.
2) On the negative side, is decreased residential and commercial proximity to the
coast-fewer house holds and businesses can locate near the waterfront.
3) On the negative side, is a potential loss of amenities at in land locations.
4) Another possible effect, which may be positive or negative, is a change in infra
structure-highways, sewage services, change or the cost of proving them.
 OBJECTIVES
 Estimate the cost of the second efficiency effect-displaced residential development or lost access to
coastal amenities.
 Analyze controls recently established in Maryland for the Chesapeake Bay-the Critical Area Program
which limits new development in a 1,000 foot buffer zone abutting the water.
 Using a method previously used by Edwards and Anderson (1984) and Shabman and Bertelson (1979)
with use estimate a hedonic price regression for housing with :
1) Using cross-sectional data from a developed coastal market.
2) Included in this regression are amenities unique to housing in the coastal area-view of the water,
frontage on the water, and nearness to the water.
3) Predict the number of new house that would have been built in the coastal area without controls but
are built elswhere with controls.
4) Predict the lost value of no longer having amenities unique the coast for displaced house with summing
these lost values to get total loss (Development Value)
 The reasoning of the method is that controls reduce households' implicit consumption of certain coastal
amenities by the number of displaced houses, and the value of each lost amenity may be approximated
by its hedonic price in existing housing markets.
 The data generated from this research would be useful for policy analysts to make rational decision.
 HEDONIC PRICE REGRESSION
 Definisi hedonic adalah berhubungan dengan utilitas. Secara bahasa adalah hal yang
berhubungan dengan kesenangan (pleasure).
 Model ekonometrik hedonic adalah model dimana variabel independen berhubungan
dengan kualitas, misalnya kualitas dari suatu produk yang ingin dibeli.
 Metode hedonic banyak diterapkan dalam penelitian ekonomi lingkungan, karena dalam
ekonomi lingkungan banyak barang-barang yang harganya tidak nyata (implisit) namun
melekat pada barang tersebut. Misalnya pengaruh kondisi lingkungan terhadap harga
properti.
 Kurva Hedonic
 THE OPPORTUNITY COST OF DISPLACEMENT
 The measure of the cost of displacement is based on a hedonic price analysis of the
Anne Arundel County housing market.
 We denote these features by the vector x, include three coastal access amenities in the
hedonic:
1) A dummy for frontage (f = 1 if a house has frontage on the coast, 0 if not);
2) A dummy for view (v = 1 if a house has a view of the water, 0 if not); and
3) Near- ness to the coast (a linear measure of distance, d, in miles from the water).
4) The hedonic then is p(x, f, v, d) where p is the price of a house Using cross-sectional
data from a developed coastal market.
 Implicit prices of coastal access amenities are calculated using this hedonic price
function.
 The implicit market price of having a house near the water with view and frontage
versus having a house with no view or frontage and being .2 miles from the water is :

 where d' (<.2) is how far the house is located from the coast. ∆p is a measure of the
discounted future implicit market value of these coastal access amenities.
 Equation 1 for counting The implicit value of the access amenties- the revealed price of
the amenities in the coastal housing market without controls noting that the Critical Area
extends .2 miles from the water
 For coastal land-use controls displace houses, there are houses that would have been
built on the coast (with frontage and view) had there been no controls are instead
built inland (without frontage and view and at some distance from the water ,so access
amenities are lost.
If N such houses are displaced by the controls, the loss is simply
𝑵
𝜮 = l [pj(x, f = 1, v = 1, d = d') - pj(x, f = 0, v = 0, d = .2)].
𝒋

Since houses may be displaced for many years following the controls, the total discounted
lost amenity value is
σ𝑻𝒕=𝟎 σ𝑵
𝒋=𝟏 [Ptj(x,f = 1,v = 1,d =d′) − ptj(x,f = 0, v = 0, d = .2)]/(1 + r)t [2]

where N, is the number of houses displaced in year t, t = 0, .. . , T with the first year
following the controls being t = 0, and r is the rate of discount. LOSS is in terms of "year 0"
dollars.
σ𝑻𝒕=𝟎 𝑵𝒕𝑬 [𝒑𝒕(x,f = 1, v =1, d = d') - pt(x,f = 0, v = 0, d = .2)]/(1 + r)' [2']
E[ pt(x, f = 1, v = 1, d = d') - pt(x, f = 0, v = 0, d = .2)] is the mean value of the N,
displaced houses in year t. The subscript j has been suppressed.
Equation [2'] may simply be broken into groups-each group with different lost amenity
values. The analysis consider three groups: (1) houses that would have had view and
frontage, (2) houses that would have had view but no frontage, and (3) houses that would
have been less than .2 miles from the coast but with no view or frontage.
LOSS =
σ𝑻𝒕=𝟎 𝑵𝒕𝟏𝑬[pt1(x,f= 1,v = 1, d = d') – Pt1(x,f = 0, v = 0, d = .2)]/(1 + r)t
+ σ𝑻𝒕=𝟎 𝑵𝒕𝟐𝑬[pt2(x,f= 0,v = 1, d = d') – Pt2(x,f = 0, v = 0, d = .2)]/(1 + r)t
+ σ𝑻𝒕=𝟎 𝑵𝒕𝟑𝑬[pt3(x,f= 0,v = 0, d = d') – Pt3(x,f = 0, v = 0, d = .2)]/(1 + r)t [3]

Nt1, Nt2, and Nt3 correspond to the number of displaced houses in each of the groups.
E[ptk(') - ptk(')] is the mean value of the Ntk houses in group k (= 1, 2, or 3) displaced in
year t.
σ𝑻𝒕=𝟎 𝑵𝒕𝟏𝑬[pt1(x,f= 1,v = 1, d = d') – Pt1(x,f = 0, v = 0, d = .2)]/(1 + r)t
Used when frontage and view also distance is consider.

σ𝑻𝒕=𝟎 𝑵𝒕𝟐𝑬[pt2(x,f= 0,v = 1, d = d') – Pt2(x,f = 0, v = 0, d = .2)]/(1 + r)t

Used when view and distance is consider.

σ𝑻𝒕=𝟎 𝑵𝒕𝟑𝑬[pt3(x,f= 0,v = 0, d = d') – Pt3(x,f = 0, v = 0, d = .2)]/(1 + r)t

Used only when distance is consider.
We estimate LOSS in the following section and divide it into 4 parts:
LOSS = LOSS(86-90) + LOSS(91-95) + LOSS(96-00) + LOSS(01-05.) [4]
Under reasonable assumptions, LOSS is a defensible estimate.
First, if the restricted coastal area is "small and open" . ∆p captures the full value of
lost coastal access amenities. "open" if there is perfect migration between the affected
coastal area and other housing markets in the region. "small" if it has an insignificant
effect on the overall supply and demand for land for housing in the region.
Second, ∆p assumes coastal access amenities in current markets are similar to what
these amenities would be in future markets.
Third, does not capture the mitigating effect of inland amenity substitutes.
Hence, we qualify our estimates with the assumptions of a small and open market and
future coastal access amenities being similar to current amenities. And, we interpret it
as a measure that misses the mitigating effects of households finding inland amenity
substitutes.
 THE DATA AND EMPIRICAL ANALYSIS
 Analyze single-family houses sold in Anne Arundel County, Maryland in 1983 County
is located on the western shore of the Chesapeake Bay ap- proximately 35 miles east
of Washington, D.C and 432 miles of shoreline. In 1985 there were 141,000 houses
and population 0f 412,000
 The estimate that approximately 80 percent of all housing in the county is located
within one mile of the shore. Never- theless, more than half of the coastal land within
1,000 feet of the water in the Critical Area is undeveloped.
 The sample is a random draw of 1,435 houses located less than six miles from the
coastline that sold in 1983. (The Commission was announced in December 1983 and
established in 1984.) Any observations with missing data on characteristics, that were
not market sales, or that we could not locate on a map were deleted-approximately 5
percent of the data.
 Table 1 defines the variables. The sale price and structural characteristic data are
from the County Board of Realtors. The locational variables are census (block group)
data and our own measures of distance to the Central Business District (CBD) and
coastline. The FRONTAGE and VIEW variables are from the County Board of Realtors
which we verified for a random draw from our sample.
 Pada Tabel 1 menjelaskan mean dan standar deviasi pada 20 variabel yang
digunakan, hal tersebut menjelaskan bahwa mean menginformasikan terkait nilai
rata-rata dari sebaran data dalam variabel penelitian sedangkan standar deviasi
menginformasikan seberapa besar sebaran data dalam variabel penelitian
terhadap nilai meannya. Semakin besar nilai standar deviasi maka semakin besar
variasi data tersebut (heterogen) maupun sebaliknya.
 Menurut pandangan kami data yang heterogen terdapat pada variabel PRICE,
BD,HISTDUM, SF, LOTSZ, MONTH,FRONTAGE, ED, %NWH, HHINC
 The estimates of the hedonic regression (the p(x) to be used in equation [3]) are given
in Table 2.
 For all of the regressions our chosen set of attributes explain a considerable portion
of the variation in housing prices and for the most part have estimated coefficients with
expected signs. The coefficients on frontage, view, and distance signs and are
statistically significant.
Our estimates of the hedonic regression (the p(x) to be used in equation [3]) are given in Table
2. We estimated three functional forms: Linear, Double-Log, and Linear Box-Cox. In the Linear
Box-Cox, 0 transforms price and X transforms explanatory variables. In both the Double-Log
and the Box-Cox a one is added to AGE, DIS TANCE, DISTCBD, and %NWH because some
observations have a value of 0 for these variables. The dummy variables are, of course, not
logged in the Double-Log or transformed in the Box-Cox.
Using these results we estimate the value of lost coastal access amenities used in equation [3] for
each of our three housing groups. We assume,
E[Pt1(x,f = 1, v = 1, d = d') – pt1(x,f = 0, v = 0, d = .2)]
= (1/M1)σ𝑀1
𝑖=1 [pi(x,f = 1, v = 1, d = d′) − pi(x,f = 0, v = 0, d = .2)] for all t for group 1,

E[Pt2(x,f = 0, v = 1, d = d') - Pt2(x,f = 0, v = 0, d = .2)]

= (1/M2) σ𝑀2
𝑖=1 [pi(x,f = 0, v = 1, d = d′) − pi(x,f = 0, v = 0, d = .2)] for all t for group 2,

E[Pt3(x,f = 0, v = 0, d = d') - Pt3(x,f= 0, v = 0, d = .2)]

= (1/M3) σ𝑀3
𝑖=1 [pi(x,f = 0, v = 0, d = d′) − pi(x,f = 0, v = 0, d = .2)] for all t for group 3.
Menurut pandangan kami Tabel 2 menjelaskan hal-hal sebagai berikut:
1) Hasil regfresi hedonic memperkirakan dengan 3 fungsi yaitu Linear, Double-Log,
and Linear Box-Cox.
2) Terdapat 1.453 data untuk observasi.
3) Nilai R2 adalah .64 (Linier) dan .79 (DoubleLog dan Linier Box Cox) hal ini
menjelaskan bahwa 64% atau 79% variabel tidak bebas diterangkan oleh
variabel-variabel yang terdapat dalam persamaan Atau dalam arti lain perubahan
variabel-variabel independen dalam model sudah dapat menjelaskan variabel
harga
4) Nilai Fstatistik adalah 132 (linier), 275(Double Log) dan 283 (Linier Box Cox)
berdasarkan uji Ftest Jumlah Variabel Bebas (V1) = 19 dan V2 =1.416 , Derajat
Kepercayaan = 0,05 (Ftabel = 1,59), maka persamaan regresi tersebut dapat
digunakan karena semua variabel tidak sama dengan nol.
5) dan θ = -.17 (Merupakan Metode kemungkinan maksimum (Maximum Likelihood
Methods)
Menurut pandangan kami Tabel 2 menjelaskan hal-hal sebagai berikut:
1) Fungsi double log menunjukkan koefisien elastisitas permintaan. Sebagaimana
contoh bahwa elastisitas permintaah terhadap view sebesar 0,07%, yang berarti
bahwa jika terjadi perubahan sebesar 1% maka permintaan akan harga jual
rumah akan berubah sebesar 0,07%, jika view mengalami kenaikan sebesar 1%
maka harga jual rumah akan meningkat sebesar 0,07%.
2) Penggunaan fungsi box cox dengan pertimbangan bahwa dalam sebaran data
terdapat beberapa variabel penelitian bersifat heterogen yang mengakibatkan
ketidaknormalan data sehingga diperlukan transformasi Box-Cox untuk
menormalkan data dan menghomogenkan varians.
3) Dalam tabel tersebut diinformasikan bahwa Parameter Box Cox adalah λ =.26
dan θ = -.17 (Merupakan Metode kemungkinan maksimum (Maximum Likelihood
Methods)
Penjelasan. 20 percent of the houses are in group 1, 10 percent are in group 2, and 70
percent are in group 3. These are based on historic shares for these amenities for houses in
the county. The expected growth in housing and our displacement scenarios are presented
in Table 4. Table 5 divides the displaced houses into groups of five-year increments. The
present value of lost coastal access amenities for an average year over the five-year
increments is presented in Table 6.
 The estimated values are presented in Table 3 ; the calculations for the Box-Cox
regression are in the Appendix. In the Box-Cox regression are :
1) The average value of lost access amenities for group 1 houses is $96.672/house.
These are houses that lose frontage, view, and .2 - d' miles of access.
2) For group 2 the average loss is $6,553/house. These are houses that lose view and
.2 - d' miles.
3) And for group 3 the average loss is $447/house. These houses only lose .2 - d' miles
of access. We use these implicit values to estimate the cost of displacement.
 Next, we predict the N,,, N2t, and N3, for t = 0,... , T-the number of displaced houses
in each group for years t = 0 through T.
 To do this we use an estimate of the total number of houses expected to be built in
Anne Arundel County from 1985 to 2005. Then, we consider two scenarios to predict
the proportion of these houses that would have been built in the Critical Area had
there been no control
 The Explanation Table 4 and Table 5
Group 1 Used when frontage and view also distance is consider.
Group 2 Used when view and distance is consider.
Group 3 Used only when distance is consider.
 Table 5 divides the displaced houses into groups of five-year increments. The
present value of lost coastal access amenities for an average year over the five-
year increments is presented in Table 6.
 Under the 100% Displacement scenario 1,027 houses per year are displaced from
1986 to 1990. Under the CBF scenario that figure is only 211.
 In each scenario we assume that 20 percent of the houses are in group 1, 10
percent are in group 2, and 70 percent are in group 3. These are based on historic
shares for these amenities for houses in the county. The expected growth in housing
and our displacement scenarios are presented in Table 4.
 Merupakan data proyeksi yang disusun oleh Maryland Departmentof StatePlanning
 [($96,672 * 205.4) + ($6,553 * 102.7) + ($447 * 718.9)1/ (1 + .03)3 = $19.1 MILLION.
This entry is shown in the table above. The (86-90) increment is discounted from 3 years in the future. The (91-
95) increment is from 8 years, (96-00) is from 13 years, and (01-05) is from 18 years. We use 3 percent as our
real rate of discount
 100% Displacement scenario assumes that 34 percent of all houses built in the county
from 1985 to 2005 would have been built in what is now the Critical Area.
 For the 100% Displacement scenario the present value (1983 dollars) of losses for an
average year from 1986 to 1990 is $19.1 million. These drop to $5.9 million per year
by the years 2000 to 2005. The decline is due to discounting and a declining rate of
growth of housing construction.
 Under the Chesapeake Bay Foundation scenario the loss is $3.9 million in the earlier
years dropping to $1.2 million in the later years.
 The present value of the displacement cost of the controls per county resident ranges
from $46/year in the early years to $14/year in the later years in the 100%
Displacement scenario, and from $9/year to $3/year per resident in the Chesapeake
Bay Foundation scenario.
Appendix Table I presents means and standard deviations for the housing
characteristics in each group.
 BOX-COX LINIER
CALCULATION OF IMPLICIT PRICES OF COASTAL ACCESS AMENITIES USING THE Box-Cox REGRESSION

The Box-Cox hedonic with 𝜆መ = .26 and 𝜃መ = -.17 is

A ∆pi is calculated for each house in the sub sample for
group i. The mean value of ∆pi across the subsample for
each group is given in Table 3 and used in our
displacement estimates.
 CONCLUSIONS
 We have presented a method for estimating the value of lost coastal access amenities due to
land-use controls. The estimates are qualified by the assumptions of the area affected by
controls being small and open and by current coastal access amenities being similar to future
access amenities. The estimates also ignore the offsetting effect of amenity substitutes at inland
locations for displaced houses.
 These results have immediate use for policy. Many types of controls are considered-usually
density restrictions or moratoria on development. In designing such controls, communities face
the trade-off of lost coastal access amenities
 These results have immediate use for policy, the estimation provides a of this trade-off, a
measure of the opportunity cost of controls. The measure is one piece of the information
required to assess the efficiency of controls.
 The measure is one piece of the information required to assess the efficiency of controls. In so
far as the measure is given per house, the opportunity cost of alternative control schemes may
also easily be compared. We only need to know how the number of displaced houses varies
between alternati
 CONCLUSIONS
 Bahwa variabel-variabel yang digunakan dalam penelitian ini memiliki pengaruh
terhadap harga jual rumah, dengan pertimbangan bahwa konsumen akan membeli
suatu rumah beserta atribut fasilitas lingkungan yang melekat.
 Dengan regresi harga hedonic memungkinkan suatu lahan atau rumah memiliki harga
pasar. Hal ini akan berpengaruh kepada kemampuan membayar untuk membeli rumah.
Konsumen akan selalu mempertimbangkan semua karakteristik rumah saat akan
melakukan pembelian. Semua karakteristik dimasukkan dalam harga rumah dalam
halini frontage,view dan distance.
 Dalam properti tidak hanya melihat berdasarkan pada struktur bangunan dan
lingkungan sekitar, namun fasilitas lingkungan memiliki peranan penting yang dijadikan
sebagai pertimbangan bagi seseorang yang akan membeli rumah. Seseorang akan
membayar lebih untuk mendapatkan kenyamanan tersebut.
 Oleh karena itu pengendalian penggunaan lahan di pesisir pantai perlu dibatasi
dengan kebijakan dari pemerintah yang bisa memberikan keuntungan bagi kedua
pihak baik konsumen maupun produsen, memang tidak dapat dipungkiri bahwa faktor
atribut fasilitas lingkungan seperti pemandangan memiliki nilai jual yang dapat dinilai
sehungga mempengaruhi harga jual suatu rumah.
 CONCLUSIONS
MATERI PEMBELAJARAN KETERKAITAN DENGAN JURNAL KET
The Fundamental of  Hasil analisi empiris terhadap jurnal ini dapat
Managerial Economics terkait dijadikan sebagai acuan/referensi untuk
Making a Decision penyusunan kebijakan dalam rangka pengendalian
penggunaan lahan di pesisir.
 Kebijakan yang dibuat akan bersifat makro
dikarenakan dengan adanya keterbatasan sumber
daya yang akan menimbulkan opportunity cost.
Teori Utilitas adalah jumlah Konsep utilitas menunjukkan pilihan konsumen atas
dari kesenangan atau konsumsi barang/jasa untu memperoleh tingkat
kepuasan relatif (gratifikasi) kepuasan tertentu, dalam jurnal ini terkait
yang dicapai untuk kepuasan/kesenangan dari atribut fasilitas lingkungan
memaksimal agar mendapat yang dapat diberikan nilai secara implisit sehingga
kesejahteraan mempengaruhi harga pasar.
 CONCLUSIONS
MATERI PEMBELAJARAN KETERKAITAN DENGAN JURNAL KET
Economic profit means The  Terjadi peningkatan pembangunan perumahan dan
difference between total perkembangan area komersil di lahan pesisir.
revenue and cost opportunity Namun, hal tersebut tidak dipengaruhi dengan
cost. peningkaatan kelestarian lingkungan yang
berakibat polusi udara/ air dan lainnya.
Opportunity cost is The  Jurnal ini memberikan gambaran dan/atau
explicit cost of a resource plus membatasi untuk penggunaan lahan pesisir dengan
the implicit cost of giving up mempertimbangkan biaya pengorbanan yang
its best alternative. harus dikeluarkan dengan beberapa variabel dan
kategori/ grup terkait.
The Time Value of Money Digunakan Present Value untuk menghitung Lost
amenity values due to houses displaced for an
average year in each of these five-year in

MATERI
PEMBELAJARAN
Elasticities are tools you
can use to quantify the
impact of changes in
prices, income, and
advertising on sales and
revenues.
Regression analysis can
be used to estimate:
Demand functions,
Elasticities, A host of
other things, including
cost functions.
CONCLUSIONS
KETERKAITAN DENGAN JURNAL KET
 Jurnal tersebut menjelaskan terkait Biaya Pengorbanan
atar pengendalian penggunaan lahan pesisir. Lahan atau
tanah termasuk dalam kategori Permintaan In Elastis
Sempurna = 0
 Yang berarti bahwa perubahanharga lahan pesisir tidak
mempengaruhi jumlah yang diminta
 Metode a hedonic price regression
 Data cross-sectional
 Menggunakan fungsi Regresi Linier Berganda, Double-Log,
and Linear Box-Cox dengan parameter yang sudah
tersedia.
 Digunakan untuk melihat hubungan antara perubahan
harga (variabel terikat) dengan beberapa variabel bebas
yaitu; frontage, view dan distance
 DAFTAR PUSTAKA
1. Jurnal Opportunity Cost of Coastal Land-Use Controls: An Empirical Analysis
2. https://www.investopedia.com/terms/h/hedonic-regression.asp - Hedonic Price
Regression
3. https://www.researchgate.net/publication/270571660_The_Application_of_Box-
Cox_Transformation_to_Determine_the_Standardised_Precipitation_Index_SPI_the_St
andardised_Discharge_Index_SDI_and_to_Identify_Drought_Events_Case_Study_in_E
astern_Kujawy_Central – Box Cox Curve
4. https://www.dummies.com/education/economics/econometrics/econometrics-and-the-
log-log-model/ - Double Log
5. https://courses.lumenlearning.com/boundless-economics/chapter/price-elasticity-of-
demand/ http://www.teachifyme.com/price-elasticity-of-supply/ - Elastisitas Kurva
6. https://id.wikipedia.org/wiki/Utilitas
 LINIER BOX COX DAN DOUBLE LOG
1) Apabila kenormalan data, kehomogenan ragam dan kelinieran tidak dipenuhi, maka
dapat dilakukan transformasi terhadap variabel tak bebas. Salah satu transformasi
yang dapat dilakukan adalah Transformasi Box-Cox yang diberlakukan terhadap
variabel tak bebas yang bernilai positif. Transformasi Box-Cox ini berupa transformasi
pangkat berparameter tunggal. Pendugaan parameter λ dapat dilakukan dengan
menggunakan Metode Kemungkinan Maksimum (Maximum Likelihood Methods). λ yang
diambil adalah λ yang menghasilkan jumlah kuadrat sisaan terkecil.
2) Metode kemungkinan maksimum (Maximum Likelihood Methods) adalah metode yang
digunakan untuk menduga parameter-parameter dengan memaksimumkan fungsi
kemungkinan yang dibentuk dari fungsi kepekatan peluang bersama beberapa peubah
acak. Fungsi kemungkinan maksimum adalah fungsi dari θ dilambangkan dengan L(θ).
3) This is a especially useful functional form, since it allows the analyst to estimate price
elasticities and income elasticities. The coefficient attached to a price explanatory
variable (x), in a demand equation for instance (where y is quantity demanded), using
a double-log function form like the following: ln(y) = a + b ln(x) + e gives the elasticity
of y (e.g., quantity demanded) with respect to x (.e.g., price). The natural logarithm
applied to an exponential equation transform the equation into a linear equation in
logarithms.
EXAMPLE OF BOX-COX CURVE
EXAMPLE OF DOUBLE LOG CURVE

If you estimate a log-log regression, a few outcomes for the coefficient on Xproduce the
most likely relationships:
Part (a) shows this log-log function in which the impact of the independent variable is
positive and becomes larger as its value increases.
Part (b) shows a log-log function in which the impact of the independent variable is
positive but becomes smaller as its value increases.
Part (c) shows a log-log function where the impact of the dependent variable is
negative.
ELASTICITY
1. In Elastis Sempurna (E = 0) : Permintaan in elastis sempurna terjadi bilamana perubahan
harga yang terjadi tidak ada pengaruhnya terhadap jumlah permintaan. E = 0, artinya
bahwa perubahan sama sekali tidak ada pengaruhnya terhadap jumlah permintaan.
2. In Elastis (E < 1) : Permintan in elastis terjadi jika perubahan harga kurang berpengaruh
pada perubahan permintaan. E < 1, artinya perubahan harga hanya diikuti perubahan jumlah
yang diminta dalam jumlah yang relatif lebih kecil.
3. Elastis Uniter (E = 1):Permintaan elastis uniter terjadi jika perubahan permintaan
sebanding dengan perubahan harga. E = 1, artinya perubahan harga diikuti oleh perubahan
jumlah permintaan yang sama.
4. Elastis (E > 1):Permintaan elastis terjadi jika perubahan permintaan lebih besar dari
perubahan harga. E > 1, artinya perubahan harga diikuti jumlah permintaan dalam jumlah yang
lebih besar. Contoh: barang mewah.
5. Elastis Sempurna ( E = ~ ) :Permintaan elastis sempurna terjadi jika perubahan
permintaan tidak berpengaruh sama sekali terhadap perubahan harga. Kurvanya akan
sejajar dengan sumbu Q atau X. E = ~ , artinya bahwa perubahan harga tidak diakibatkan oleh
naik-turunnya jumlah permintaan.
Price Elasticity of Supply Curve
LAW OF SUPPLY AND DEMAND
The law of supply and demand is a theory that explains the interaction between the
supply of a resource and the demand for that resource. The theory defines the effect that
the availability of a particular product and the desire (or demand) for that product has
on its price. Generally, low supply and high demand tends to increase price. In contrast,
the greater the supply and the lower the demand, the price tends to fall.
Factors Affecting Supply The above example takes into account the supply created only
by a single business. In the real world, supply is determined by many other factors.
Production capacity, production costs such as labor and materials, and the number of
competitors directly affect how much supply businesses can create. Ancillary factors such
as material availability, weather and the reliability of supply chains also can affect
supply.
Factors Affecting Demand Demand is affected by the quality and cost of a product,
among other factors. The number of available substitutes, amount of advertising and the
shifts in the price of complementary products also affect demand. For example, if the
price of video game consoles drops, the demand for games for that console may increase
as more people buy the console and want games for it.
 CHANGES IN SUPPLY AND DEMAND
Changes in Supply
Increase in supply only
 Decrease equilibrium price
 Increase equilibrium quantity
Decrease in supply only
 Increase equilibrium price
 Decrease equilibrium quantity

Changes in Demand
Increase in demand only
 Increase equilibrium price
 Increase equilibrium quantity
Decrease in demand only
 Decrease equilibrium price
 Decrease equilibrium quantity