ECONOMIC MATH

Course Subject : Mathematics Economy

Credits: 3 credits
Material :
1). Theory Line And Row
2). Application Theory Line And Row
3). Theory Function And Theory Linear Function
4). Application in Economy
5). Application Theory Economy Macro
6). Draft base limit theory and its application .

READING MATERIAL
1. Judith Felicia Pattiwael Irawan " Mathematics Economy ”
2. Drs. Suprian Atmaja " Mathematics Economy 1”
3. Albari “ Mathematics For Economist And Business ”
 SYLLABUS
1. Weeks 1 and 2: Line and series theory,
2. Week 3 and 4 : Application of Line and Series Theory in Economics
3. Week 5 : Quiz 1
4. Weeks 6 and 8: Function Theory and Linear Function Theory
5. Week 9 to 12: Application in Economics, regarding:
a). Demand and Supply Functions
b). market balance
c). Quiz 2
d). Tax effect on. market balance
e). Effect of Subsidies on. market balance
f). Reception function
g). Cost Function
h). Analysis of “Break Events”
6. Week 13 , 14 : Application of Macroeconomic Theory
7. Week 15, 16: The basic concept of Limit theory and its application
 Theory Line And Row
1. Line Definition
A sequence of numbers arranged regularly with a certain pattern of
change from one term to the next.
Classification:
a). Number of syllables :
1). Finite Rows
2). Infinite Rows

b). The change pattern:

1). Count Row
2). Measure Line
3). Harmonic Line
Line and Series Theory (continued)

2. Count Row
A sequence of numbers where the pattern changes from
one term to the next, the magnitude is fixed, and the
pattern
these changes can be obtained from the difference
between a tribe with the previous tribe.
Example ;
2, 4, 6, 8, 10, 12 …… where ;
S 1 (first term) = 2 a = 2
S 2 (second term) = 4 b = 2
S 3 (third term) = 6 n = many terms
S n (n-th term) Formula S n = a+(n-1)b
Line and Series Theory (continued)
3. Arithmetic Series
Namely a series of numbers arranged in a rule where the first
term is the same as the first term of the counting line,
the second term is the sum of the first two numbers of
the counting line, the third term is the sum of the first
three numbers of the counting line, and so on.
Example :
Count lines: 2, 4, 6, 8, 10, . . . , Sn count line
Countdown: 2, 6, 12, 20, 30, . . ., D n
where : D 1 = 2
D 2 = 2 + 4 = 6 D n = n/2(a + Sn)
D 3 = 2 + 4 + 6 = 12 D n = n/2 { 2a + (n-1)b}
D 4 = 2 + 4 + 6 + 8 = 20
Examples of Application in
Economics and Business
1. Given the third and seventh terms of an arithmetic
sequence are 150 and 170 respectively. Find the tenth
term of the arithmetic sequence and the fifth term of
the arithmetic series.
2. What is the first term and difference of a count line
where the fourth term of the count line is zero and the
third term of the arithmetic series is 180.
3. Count line X the value of the first term is 350 and the
difference between the tribes is -10. While the Y-count
line, the first term is 50 and the difference is 10. In
what tribe do these two lines have the same value?
 APPLICATION IN BUSINESS AND
ECONOMY
1. A unit count line has a first term that is worth 210.
The difference between terms is 15.
Count the 10th term!
What is the sum of the first five terms?
2. The fifth term of a gitung line is known to be 580
while the sum of the first seven terms is 3920. What
is the first term and what is the difference between
the tribes?
Also count the twelfth term and what is the sum of the
first twelve terms?
 Application In Business And Economy
1. Business Development
The business development referred to is the extent to
which businesses whose growth is constant from time
to time follows changes in the line of accounts.
Example :
 The Genting Company produced 5,000 units of roof tiles in the
first month. With the additional workforce, the number of products
produced also increases, so that the company can add 300 units
of roof tiles every month. If production progress is constant every
month,
a). How many tiles are produced in the 12th month?
b). How many tiles have been produced during one
first production?
 Jaya Abadi company revenue from the sale of Rp.
1.2 billion in the fifth year and Rp. 1.8 billion in
year seven. If the development of the company's
revenue is constant from year to year,
a). How much is the growth in revenue per year?
b). How much is the receipt in the first year?
c). In what year did the acceptance reach
Rp. 2.7 billion?
Line and Series Theory (continued)
4. Measure Line
That is the number in which the pattern of change from one
term to the next is of a fixed magnitude and the pattern
of change can be obtained from a comparison
between a term and the previous term.
Example :
2, 6, 18, 54, 162, …………. Sn _
S 1 (first term) = 2
S 2 (second term) = 6
S 3 (third term) = 18
S 4 (fourth term) = 54
S 5 (fifth term) = 162
S n = …………………………. Sn = arn - 1
Line and Series Theory (continued)
5. Measure series
Namely a series of numbers arranged according to the rules
where the first term is equal to the first term of the
measuring line, the second term is the sum of the first two
terms of the measuring line, the third term is the sum of the
first three terms of the measuring line, and so on.
Example :
Measure line: 2, 6, 18, 54, 162, …….., then
Measuring series: 2, 8, 26, 80, 242, ……..

a(1 – r n ) a ( r n - 1 )
D n = -------------, r < 1 or D n = ---------------, r > 1
1 - rr - 1
2. Theory of Value for Money
The expansion of the geometric progression is
used in interest-bearing problems, lending and
borrowing, as well as investment problems
associated with interest rates for a certain period
of time, the amount of which is assumed to be
constant from time to time.

The pattern for calculating the initial capital of the

nth year with a discrete future value :

P n = Po ( 1 + r ) n
 Pattern/formula used:

1. P n = Po ( 1 + r ) n 2. P n = Po ( 1 + r/m ) nm

with :
P n = capital in the nth year (in the future)
P o = current capital
r = interest rate
n = the nth year ( compounding interest factor )
( 1 + r ) n or ( 1 + r/m ) nm
 Example :
• 1. A customer plans to deposit Rp. 50
million within 10 years. The deposit
interest is once a year with an assumed
constant interest rate of 11% per year.
What is the amount of money received
after the maturity of the deposit?
Answer :
Is known :
P 0 = 10,000,000,-
r = 0.11
n = 10

P n = P 0 (1 + r) n

= 10,000,000 (1 + 0.11) 10

= 10,000,000 x (1.11 10)

= 10,000,000 x ( 2.839420986 )
= 28,394,209.86
Example : ( try to search, huh? )
2. A customer plans to deposit Rp. 3 0
million within 5 years. Deposit interest is
received every 6 months with an assumed
constant interest rate of 1-2 % per year.
What is the amount of money received
after the maturity of the deposit?
Example : ( try to search, huh? )
3. A person plans to get married FOUR years
from now, for wedding expenses he plans to
deposit Rp. 40 million within 4 years. Deposit
interest is received every 4 months with an
assumed constant interest rate of 10 % per
year. What is the amount of money received
after the maturity of the deposit?
n R1.R 2.R 3...........Rn

Growth Resident
• Row measuring can Also used For count
amount resident on something time certain
. Growth average resident in something
area certain For something period time
certain If amount its inhabitants is known
from time to time .
n
• Formula : i = √ R 1 .R 2 .R 3 ……. R n
 Example
• Total population in an area from 2002 - 2007
as follows :

End of year Number of Population (people)

2002 450,500
2003 476,300
2004 489,000
2005 500,250
2006 520,700
2007 539,000

What is the average annual population growth for

the years 2002 to 2007?
Settlement
• Population growth for 2003
R 2003 = 476,300 / 450,500 = 1.06
Reflects that the population in the city has increased by 6%
• Population growth for 2004
R 2004 = 489,000 / 476,300 = 1.03
Reflects that the population in the city has increased by 3%
• Population growth for 2005
R 2005 = 500.250 / 489.000 = 1.02
Reflects that the population in the city has increased by 2%
• Population growth for 2006
R 2006 = 520,700 / 500,250 = 1.04
Reflects that the population in the city has increased by 4%
• Population growth for 2007
R 2007 = 539,000 / 520,700 = 1.04
Reflects that the population in the city has increased by 4%
 advanced
• Then enter into the following table:

End of year Number of Population Growth

(people)
2002 450,500
2003 476,300 1.06
2004 489,000 1.03
2005 500,250 1.02
2006 520,700 1.04
2007 539,000 1.04
advanced

Then look for the average population

growth from 2002 to 2007 as follows:

5
i = √ (1.06)(1.03)(1.02)(1.04)(1.04)

5
i = √ 1.204508689

= 1.0379
• HOME TASKS YES?
• What is the first term and difference of a count line
where the fourth term of the count line is zero and the
third term of the arithmetic series is 180.
• A man plans to get married ten years from now, for
wedding expenses he plans to deposit Rp. 10 0 million in
a period of 10 years. Deposit interest is received every 6
months with an assumed constant interest rate of 10.5 %
per year. What is the amount of money received after the
maturity of the deposit?
• The population of a city was recorded at 3.25 million in
1998, estimated to be 4.5 million in 2003. If 1998 is
considered the base year, what is the growth? What was
the population in 2005 and what was it in 2010?
• HOME TASKS YES?
• What is the first term and difference of a count line where
the fourth term of the count line is zero and the third term of
the arithmetic series is 180.
• A man plans to get married in the next six years, for
wedding expenses he plans to deposit Rp. 10 0 million in a
period of 6 years. Deposit interest is received every 6
months with an assumed constant interest rate of 11 % per
year. What is the amount of money received after the
maturity of the deposit?
• The population of a city was recorded at 3.25 million in
1998, estimated to be 4.5 million in 2003. If 1998 is
considered the base year, how much is the growth? What
was the population in 2005 and what was it in 2010?
 KUIS 1
1. Genting Company produce 1 5,000 tile units on month first . With exists
addition power Work so amount the resulting product Also increases , so
company can add the product 10 00 units precarious every month . If
development production constant every month ,
a). How many amount the resulting tiles on month 12th ?
b). How many amount precarious yes produced for a year?

2. A plan to get married in five years to come, for the wedding planning deposit
costs the money in Conventional Banks as much Rp . 5 0 million in period
time 5 year . Flower the deposit received every 6 months very with level
assumed interest _ constant by 10 % per year . How many amount money
received _ after period due from _ deposit ?

3. The population of a city was recorded at 3.5 million in 2000, estimated to be

4.5 million in 2005. If 2000 is considered the base year, what is the growth?
What was the population in 2010 and how many in 2015?
 BASIC CONCEPTS OF
FUNCTION THEORY,
LINEAR FUNCTION THEORY AND

ITS APPLICATION IN BUSINESS

AND ECONOMICS
 FUNCTION THEORY
AND
LINEAR FUNCTION THEORY
DEFINITION OF FUNCTION
Function, namely the mathematical
relationship between a variable and other
variables.

Functional elements
 Variable
 Coefficient
 Constant
• Variable
Variables are elements whose nature changes from
one state to another.
Independent variables are variables that explain
other variables.
The dependent variable is the variable explained by
other variables,
• The coefficient is a number or number that is
placed right in front of a variable, related to the
variable in question.
• Constants are fixed and not associated with any
variable.
In general if it is said that
y is a function of x, then it is written
y = f(x), where x is the independent
variable and y is the dependent
variable.
For example:
3y = 4x – 8, y is the dependent variable
x is the independent variable
3 is the y coefficient
4 is the coefficient of x
- 8 is a constant
 FUNCTION THEORY
AND
LINEAR FUNCTION THEORY
DEFINITION OF LINEAR FUNCTIONS
A linear function is a polynomial function
whose independent variable has the highest
power of one: Y = a 0 + a 1 x 1
Y dependent variable, x independent variable.
a 0 is a constant, a positive, negative, or zero value
a 1 coefficient, its value is positive, negative, or zero.
 DESCRIPTION OF LINEAR
FUNCTIONS
Y

1. Y = 4 + 2x
Y = 4 + 2x
0.4

X
-2.0 Y

2. Y = 4 - 2x

0.4

X
2.0
Y = 4 - 2x
 DESCRIPTION OF LINEAR
FUNCTIONS
3. Y = 4 Y

2, 4
0.4 Y=4

0 2 X

4. Y = -4 + 2x Y
Y = -4 + 2x

0
2.0 X
0, -4
 DESCRIPTION OF LINEAR
FUNCTIONS
5. Y = -4 -2x Y

-2.0
0, -4

Y = -4 - 2x

6. Y = - 4 Y
2

0 X

0, -4 2, -4 Y = -4 + 2x
 DESCRIPTION OF LINEAR
FUNCTIONS
Y Y = 0 + 2x
7. Y = 0 + 2x 2, 4
4

X
0 2

8. Y = 0 – 2x Y
0
2 X

2, -4 Y = 0 - 2x
RELATIONSHIP OF TWO LINEAR
FUNCTIONS
1. Y = a 0 + a 1 x
1. SQUAD
1. Y' = a 0 ' + a 1 '
x

0
1. Y = a 0 + a 1 x

2. PARALLEL 1. Y' = a 0 ' + a 1 '

x

0 1. Y = 4 + 4x, intercept 4, gradient 4

2. Y = 2 + 4x, intercept 2, gradient 4

 RELATIONSHIP OF TWO LINEAR
FUNCTIONS

1. Y = a 0 + a 1 x
4. CUTS

2. Y' = a 0 ' + a 1 '

x
1. Y = 4 + 4x, intercept 4, gradient 4
0
2. Y = 2 - 4x, intercept 2, gradient -4
 RELATIONSHIP OF TWO LINEAR
FUNCTIONS
5. INTERSTANCES 1. Y = a 0 + a 1 x

2. Y' = a 0 ' + a 1 '

x
0 1. Y = 4 + 4x, intercept 4, gradient 4

2. Y = 2 – 1/4x, intercept 2, gradient -1/4

1. Y = a 0 + a 1 x
6. Perpendicular Intersect

2. Y' = a 0 ' + a 1 '

x
1. Y = 2 + 4x, intercept 2, gradient 4
0 2. Y = 2 – 1/4x, intercept 2, gradient -
1/4
 LINEAR FUNCTION CUTTING POINT
• How to find the point of intersection of two linear functions
For example: two lines that intersect ie
2x + 3y = 4 and x + 2y = 1
Method of substitution: 2x + 3y = 4 .....*
x + 2y = 1 x = -2y + 1 .... **
Enter ** on *
2x + 3y = 4 becomes 2(-2y+1) + 3y = 4
-4y + 2 + 3y = 4
-4y + 3y = 4 -2 -y = 2y = -2
x = -2y +1
x = -2 . (-2) + 1
x=4+1=5
 LINEAR FUNCTION CUTTING POINT
• How to find the point of intersection of two linear functions
For example: two lines that intersect ie
2x + 3y = 4 and x + 2y = 1
Method of elimination: 2x + 3y = 4 (x1) 2x + 3y = 4
x + 2y = 1 (x2) 2x + 4y = 2
-Y=2
Y = -2
Plug in 2x + 3y = 4 to 2x + 3(-2) = 4
2X + (-6) = 4
2x = 4 + 6
2x =10. then x = 10/2 = 5
 CREATING LINEAR
FUNCTIONS
If two unit points are known, ie
A (x 1 ,y 1 ) and B (x 2 ,y 2 ), then the line through
the two points can be found:
Y – Y 1= X – X 1
Y 2- Y 1X 2– X 1
If you know a unit point A(x,y) and the
gradient/slope m, then to find out the exact line
that goes through that point, you can get it by:
Y – Y 1 = m ( X – X 1 ), m = ∆Y / ∆X
 EXAMPLE 1
• Set up a linear function through the points
(3,3) and (5,7).
Answer :
For example: (x 1 ,y 1 ) = (3,3) and (x 2 ,y 2 ) =
(5,7)
Then: y – 3 = x – 3
7-35-3
: y – 3 = x – 3 y – 3 = 4(x – 3)
422
: y = 3 + 2x - 6 y = 2x – 3
 EXAMPLE 2
• Find the line through the point (3,3) with a
slope of 5
Answer :
For example: (x 1 ,y 1 ) = (3,3) and m = 5
Then: y – y 1 = m ( x –x 1 )
y–3=5(x–3)
y – 3 = 5 x – 15
y = 5x – 15 + 3
y = 5x -12
 HOUSE WORK
Draw the following linear function:
1. Y = 2x + 8
2. 2y = 7 – 4x
3. 3x = -3y – 12
Find the point of intersection of the following linear
functions with
1. 4x + 3y = 4 and 2x – y = 4
2. 4x + 3 y =4 and 4x – 2y = 8
a. Elimination method
b. Substitution method
Find the line that passes through the point
1. (2, 3) and (5,8)
2. (-3,3) and ( 7,8)
 PLEASE LOOK AT THE HOME
Draw the following linear function:
1. Y = 2x + 8
2. 2y = 7 – 4x
3. 3x = -3y – 12
Find the point of intersection of the following linear functions with
1. 4x + 3y = 4 and 2x – y = 4
2. 4x + 3 y =4 and 4x – 2y = 8
a. Elimination method
b. Substitution method
Find the line that passes through the point
1. (2, 3) and (5,8)
2. (-3,3) and ( 7,8)
Find the line that goes through
1. (2,5) with a gradient of 4
2. (5.2) with gradient 3
3. Find the line through point A (4, -4) and B ( 2, 8 ).
4. Find the line through the point ( 2, 3 ) with a slope of 4.
 APPLICATION OF LINEAR FUNCTION
THEORY
IN BUSINESS AND ECONOMICS
APPLICATION :
1. Request Function
2. Offer Function
3. Market Equilibrium
4. Effect of Taxes and Subsidies on market
balance
5. Acceptance Function
6. Cost Function , and
7. Break even analysis.
 1. REQUEST FUNCTION
The demand function reflects the relationship between
the price variable ( P; price ) of an item and the
quantity demanded variable ( Qd; quantity
demand ). Written : P = f(Qd).
This function reflects consumer behavior in the market
Applicable nature ( Law of Demand ) :. if the price of a
good increases, the quantity demanded will
decrease, if the price of a good decreases, the
quantity demanded will increase.
 DEMAND FUNCTION GRAPH
P

P1
P 2 P = f(Qd)

0 Qd 1 Qd 2 Qd
Draw the demand function if it is known that: P = 30 – 2 Qd
or: Y = 30 – 2x
Answer :
For example Y = 0, then 30 – 2x = 0
-2x = -30
x = 15 (15, 0)
For example X = 0, then Y = 30 – 0
(0.30) Y(P) Y = 30 (0.30)

Y=30-2x

0 (15.0) X (Qd)
 EXAMPLE
1. An item if sold for Rp. 5,000 per unit will sell as many as 30
units. However, if it is sold at a lower price, namely Rp.
4,000 per unit, then the number of requests for these goods
increases to 50 units. What is the request function?
Describe the request function!
2. The demand for an item is 500 units when the price is
40,000. If every increase of 1,250 causes the number of
requests to decrease by 250, what is the demand function
and describe the demand function on a Cartesian graph!
 2. OFFER FUNCTION
The supply function is a function that reflects the
relationship between price variables ( P ; price ) an
item with a variable number of goods offered ( Qd ;
Quantity Supply ) Write P = f(Qs ). This function
reflects the behavior of producers in the market.
The applicable nature ( Law of Supply ) if the price of
goods increases, the quantity of goods supplied will
increase. And vice versa if the price of goods
decreases, the quantity of goods supplied will
decrease,
 SUPPLY FUNCTION GRAPH
P
P = f(Qs)

0 Qs
 EXAMPLE
Draw the supply function, given that P = 120 + Qs
Answer :
For example P = 0, then 120 + Qs = 0
Qs = - 120 (- 120, 0)
For example Qs = 0, then P = 120 + Qs
P = 120 (0.120)
P P=120+Qs

(0.120)

(-120.0) 0 Qs
 EXAMPLE
1. An item market price of Rp. 5,000 per unit, the
manufacturer will offer as many as 30 units. However, if the
price is higher, namely Rp. 6,000 per unit, then the number
of goods offered by producers will increase to 50 units.
How does the offer function? Describe the function of the
offer!

2. Offering 500 units of an item when the price is Rp. 40,000. If

every price increase is Rp. 1,000 will cause the number of
bids to increase by 20 units, what is the supply function and
describe the supply function on the Cartesian graph!
 ANSWER
Is known :
(P 1 , Qs 1 ) = (3000, 5000)
∆P = 2000, ∆Q s = 20
Supply function : (P – P 1 ) = m (Qs – Qs 1 )
Is known :
(P 1 , Qd 1 ) = (5,000, 20)
(P 2 , Qd 2 ) = (10,000, 10)
Request function:
(P – P 1 ) = ( Qd – Qd 1 )
(P 2 – P 1 ) (Qd 2 – Qd 1 )
 3. MARKET BALANCE
Market balance or Equilibrium is a condition in which:
The equilibrium price ( Pe ) is reached:
Quantity demanded = Quantity supplied.
Qe : Qd = Qs
Balance quantity (Qe) is achieved:
Price of goods demanded = Price of goods supplied.
Pe : P = P
 MARKET BALANCE GRAPH
P
P = f(Qs)

(Qe, Pe)
Pe

0 Qe Qs, Qd
P = f(Qd)
 EXAMPLE
For an item, at a price of Rp. 12,000
entrepreneurs offered 60 units of these goods,
and each price increase of Rp. 4,000, the number
of goods offered also increased by 40. At a price
of Rp. 10,000 the number of requests for these
goods is 40 units and for a price increase of Rp.
20,000 the number of requests reduced to 20
units. What is the demand function and supply
function of the good? Where is the equilibrium
price and quantity reached? Draw the graph!
 ANSWER
Is known :
(P 1 , Qs 1 ) = (12000, 60)
∆P = 4,000, ∆Q s = 40
Supply function : (P – P 1 ) = m (Qs – Qs 1 )
P – 12,000 = 100(Qs – 60)
P – 12,000 = 100 Qs – 6,000
P = 100 Qs + 12,000 – 6,000
P = 100 Qs + 6,000
So the supply function is: P = 100 Qs + 6000
 ANSWER ( continued )
Is known :
(P 1 , Qd 1 ) = (10,000, 40)
(P 2 , Qd 2 ) = (20,000, 20)
Request function:
( P – P 1 ) = ( Qd – Qd 1 )
(P 2 – P 1 ) (Qd 2 – Qd 1 )

(P – 10,000) = (Qd – 40)

20,000 -10,000 20 – 40
(P – 10,000) = Qd – 40 P - 10,000 = 10 000 (Qd - 40)
10,000 -20 -20
P = 10,000 – 500Qd + 20,000 P = - 500 Qd + 30,000
So the demand function is: P = - 500 Qd + 30,000
 Graph of Market Equilibrium Function
P
P = -500 Qd + 30,000
P = 0 500 Qd = 30,000
Qd = 30,000/500 = 60 30,000
(60, 0)
Qd = 0 P = 30,000 P = 100 Qs + 6000
(0.30,000)

P = 100 Qs + 6000
P = 0 100Qs = -6000
QS = -60 (-60, 0)
Qs = 0 P = 6000 ( 0.6000)
6000

Qs
- 60 0 60
P = -500 Qd + 30,000
 Graph of Market Equilibrium Function
P = -500 Qd 30,000
+
(continued)
P = 100 Q s + 6,000 -
P
0 = -600 Q + 24,000
600 Q = 24,000
Q = 24,000/600 = 40 30,000

P = 100 Q + 6,000 P = 100 Qs + 6000

P = (100 x 40) + 6,000
P = 4,000 + 6,000
P = 10,000
( 40, 10,000)
So a balance occurs
At the price of 10.000 with 6000
Total item 40 units.
Qs
- 60 0 60
P = -500 Qd + 30,000
 HOUSE WORK
1. The supply of an item is 500 units when the price is Rp. 40,000. If every price
increase is Rp. 1,250 will cause the number of bids to increase by 250 units,
what is the supply function and describe the supply function on the Cartesian
graph!

2. For an item, at a price of Rp. 6,000 entrepreneurs offer 30 units of these goods,
and each price increase of Rp. 2,000, the number of goods offered also
increased by 20. At a price of Rp. 5,000 the number of requests for these goods
is 20 units and for a price increase of Rp. 10,000 the number of requests
reduced to 10 units. What is the demand function and supply function of the
good? Where is the equilibrium price and quantity reached? Draw the graph!

3. For a commodity, at a price level of 10 entrepreneurs sell 15 of their goods. For

every increase in price by 5, the number of goods to be sold is 25. What is the
supply function?
 answer
1. Known :
(P 1 , Qs 1 ) = ( 40,000, 500 )
∆P = 1.250 and
∆Qs = 250
m = 1.250/250 = 5
P - P 1 = 5 ( Qs – Qs 1 )
P - 40,000 = 5 (Qs - 500)
P = 40,000 + 5 Qs – 2,500
P = 37,500 + 5Qs.
P = 5 Qs + 37,500
 Supply Function Graph
P = 5 Qs + 37,500
P P = 5 Qs + 37,500
P = 0 5Qs = - 37,500
(-37,500.0)
37,500
Qs = 0 P = 37,500
(0.37,500)

Qs
- 37,500 0
 answer
2. Known :
(P 1 , Qs 1 ) = ( 6,000, 30 )
∆P = 2,000 and
∆Qs = 20
m = 2,000/20 = 100
P - P 1 = 100 ( Qs – Qs 1 )
P - 6,000 = 100 (Qs - 30)
P = 6,000 + 100 Qs – 3,000
P = 3,000 + 100 Qs.
P = 100Qs + 3,000
So the supply function is: P = 100 Q s + 3000
 answer
2. Known:
(P 1 , Qd 1 ) = ( 5,000, 20 )
(P 2 , Qd 2 ) = (10,000, 10 )
( P - P 1 ) = ( Qd – Qd 1 )
( P 2 - P 1 ) = ( Qd 2 - Qd 1 )
( P - 5000 ) = ( Q d – 20 )
(10000 - 5000) ( 10 - 20 )
( P - 5000 ) = ( Q d – 20 )
5000 -10
-10( P - 5000 ) = 5000(Q d – 20 )
P - 5,000 = - 500Qd + 10,000
P = - 500 Qd + 15.00
So the demand function is: P = -500 Q d + 15,000
 Graph of Market Equilibrium Function
P = -500 Qd + 15,000
P = 0 -500Qd = -37,500 P
Qd = -37,500 /-500 = 75
(75.0)
Qd = 0 P = 15,000 15,000 P = 100Qs + 3000
(0.15,000 )
P = 100 Qs + 3000
P = 0 100Qs = -3000
QS = -30 (0,-30)
Qs = 0P = 3000
( 0.3000)
3000

Qs
- 30 0 75
P = -500 Qd + 15,000
 Graph of Market Equilibrium Function
P = -500 Qd 15,000
+
(continued)
P = 100 Q s + 3,000 -
0 = -600 Q + 12,000 P
600 Q = 12,000
Q = 12,000/600 = 20
15,000 P = 100 Qs + 3000
P = 100 Q + 3,000
P = (100 x 20) + 3,000
P = 2,000 +3,000
P = 5,000
(20, 5000

So a balance occurs
At the price of 5.000 with 3000
Total item 20 units.
Qs
- 30 0 75
P = -500 Qd + 15,000
 answer
3. Known :
(P 1 , Qs 1 ) = ( 10, 15 )
∆P = 5 and
∆Qs = 25
m = 5/25 = = 0.2
P - P 1 = m ( Qs – Qs 1 )
P - 10 = 0.2 (Qs - 15)
P = 10 + 0.2 Qs – 3
P = 0.2 Qs + 7 or (1/5 Qs + 7)
So the supply function is: P = 1/5 Q s + 7
 SUPPLY FUNCTION GRAPHICS
Draw the supply function, given that P = 1/5 Qs + 7
Answer :
For example P = 0, then 1/5 Qs + 7 = 0
1/5 Qs = - 7 Qs = - 7/0.2 = -35
(35.0)
For example Qs = 0, then P = 7 (0, 7)

P P = 1/5 Qs + 7
7

(-35) 0 Qs
 4. INFLUENCE OF TAXES ON
MARKET EQUIPMENT
The government imposes a sales tax on producers, thus
the price will change. The sales tax is stated at the tax
rate (t) = one unit of money/one unit of goods.
P
P=1/2Qs + 5
P=1/2Qs + 3

Qd. Qs
THE EFFECT OF TAXES ON THE MARKET
EQUIPMENT (continued)
Before taxes After taxes
(Tax rate ( t) )

Request Function P = f(Qd) P = f(Qd)

Offer Function P = f(Qs) P = f(Qs) + t

 EXAMPLE IN ECONOMICS
The demand function and supply function of an item are
given as follows:
Qd = 11 - P and Qs = -4 + 2P
Determine the balance of the price and the goods and draw
the graph!
ANSWER :
Graph of Supply Function :
Demand Function Graph:
Qs = -4 +2 P
Qd = 0, P = 11 (0.11) Qs = 0.2 P = 4 . P = 2
(0, 2)
P = 0. Qd = 11 (11, 0)
P = 0, Qs = -4 (-4, 0)
 Graph of Supply and Demand
Functions

11 Qs = -4 + 2P

5 (6, 5)

2
0 11 Q
-4 6
Qd = 11 - P
 EXAMPLE IN ECONOMICS
The demand function and supply function of an item are
stated as follows:
Qd = 11 - P and Qs = -4 + 2P
Determine the balance of the price and the goods and draw
the graph!
ANSWER :
Qd = 11 - PP = 5
Qs = -4 + 2 P – Qd = 11 - 5
0 = 15 - 3 PQd = 6
-3P = -15 Balance price 5
P = -15/-3 = 5 Balance quantity 6
 Balance Price and Quantity of
goods (Quantity)
P

11 Qs = -4 + 2P or
2P – 4 = Qs 2P = Qs + 4
P = ½ Qs + 2
5

2
0 11 Q
-4 6 Qd = 11 - P
P = 11 - Qd
P = -Qd + 11
 EXAMPLES OF TAX IMPOSITION IN
ECONOMICS
The demand function and supply function of a good are
given as follows Qd = 11 - P and Qs = -4 + 2P
The government imposes taxes on these producers at a tax
rate of t = 3 / unit of goods.
1.Find the equilibrium price and quantity in the market
after tax.
2.Describe the changes due to the tax?
3.What is the tax rate borne by consumers?
4.What is the tax rate borne by the producer?
5.How much total tax does the government receive?
6.What is the total tax borne by consumers?
7.How much is the total tax borne by the producer?
 EXAMPLES OF TAX IMPOSITION IN
ECONOMICS
The demand function and supply function of a good are given as
follows Qd = 11 - P and Qs = -4 + 2P
The government imposes taxes on these producers at a tax rate of t =
3 / unit of goods.
ANSWER :
Demand function: P = 11 – Qd and
Supply function: P = ½ Qs + 2 + t
P = ½ Qs + 2 + 3 P = ½ Qs + 5
P = -Qd + 11
P = ½ Qs + 5 – P = -Qd + 11
So the price balance occurs at the
0 = -1.5Qs + 6 P = -4 +11
price of Rp. 7,- and
1.5 Qs = 6 Qs = 4 P = 7 The balance of goods (quantity) in
the amount of 4 units.
 After Taxable Balance of Price and Amount
of Goods (Quantity).
P P = ½ Qs + 5
11 P = ½ Qs + 2

7 Taxes are paid

5 consumers
Prod.
2
0 11 Q
-4 4 6
P = -Qd + 11
 ANSWER
1. The price balance at a price of 7 rupiah, and
the quantity balance at the number of goods 4
2. Tax rates borne by consumers:
(7 – 5) = 2
3. Tax rates borne by producers:
(3 – 2) = 1
4. Taxes received by the government ( 3 x 4 ) = 12
5. Total tax borne by consumers:
(2x4)=8
6. Total tax borne by the producer:
(1 x 4 ) = 4
 Problems example
The demand function and supply function are known as follows:
Qd = 15 - P and Qs = 2 P -6
To producers, the government imposes taxes at a rate of t =
3/unit
1. Find the pre-tax and after-tax price and quantitative balances
2. What is the tax rate borne by consumers
3. What is the tax rate borne by producers
4. What is the total tax received by the Government
5. How much tax does the consumer bear
6. How much tax does the producer bear
7. Draw it on a Cartesian graph, and shade it.
 Answer
Is known :
Demand function before tax: Qd = 15 - P
For example: Qd = 0.15 – P = 0. P = 15. (0.15)
: P = 0, Qd = 15, (15, 0)
Supply function before tax: Qs = 2 P – 6
For example: Qs = 0, 2P – 6 = 0. 2P = 6, P = 3 (0, 3)
: P = 0, Qs = -6 (-6, 0)
P – 15 = -Qd, P = -Qd +15, P = -Qd + 15
2P – 6 = Qs. 2P = Qs + 6, P = 1/2Qs + 3 –
0 = -1.5Qs + 12
1.5Qs = 12, Qs = 12/1.5 = 8
P = -Qd +15, P = -8 +15. P=7
The price balance before tax occurs at a price of 7 rupiah
The balance of goods (quantity) occurs in the amount of 8 units.
 Answer
Is known :
Demand function : Qd = 15 - P
Supply function: Qs = 2 P - 6
Tax rate of: t = 3.
Demand function : Qd = 15 - PP = - Qd + 15
Supply Function: Qs = 2P – 6 2P = Qs + 6
After tax: P = ½ Qs + 3 + 3 P = ½ Qs + 6
P = -Qd + 15 (-12, 0) and (0, 6)
P = ½ Qs + 6 - P = -Qd + 15
0 = -1.5Qs + 9 P = -6 +15
1.5 Qs = 9 Qs = 6 P = 9 So the price balance after
occurring at a price of Rp. 9 and
The balance of goods (quantity)
after tax on the amount of 6 units.
 After Taxable Balance of Price and Amount
of Goods (Quantity).
P
15
P = ½ Qs + 6
P = 1/2Qs + 3
9
7
6.
3
0Q
-6 6 8 15
P = -Qd + 11
 Balance Price and Quantity of
goods (Quantity)
P

11 Qs = -4 + 2P or
2P – 4 = Qs 2P = Qs + 4
P = ½ Qs + 2
5

2
0 11 Q
-4 6 Qd = 11 - P
P = 11 - Qd
P = -Qd + 11
 5. EFFECT OF PROPORTIONAL TAX ON THE MARKET
BALANCE
In addition to imposing a fixed tax per unit, the government
can also impose a proportional tax on goods as
determined by the producer. The amount of tax that the
government will receive is a certain amount of the price.
Thus the higher the price set by producers, the higher the
tax received by the government.
P supply is identified as P = aQ + b, then

Pt = P + tP
Pt = (1 + t) P Pt = (1 + t)(aQ + b)
For Pt = new price after applied tax
t = proportional tax, in percentage (%)
 THE EFFECT OF PROPORTIONAL TAX ON MARKET
BALANCE
The consequences of imposing a proportional tax on consumers, the
government and producers can be described as follows:
P

Taxes paid
cons.
St
Taxes paid by
the prod.

Pt Et
S Taxes
PAE received
P sQ tB . by Pem.

D
Qt QQ
 THE INFLUENCE OF PORPORTIONAL TAXES
ON THE MARKET BALANCE

Before taxes After taxes

(Tax rate ( t) )

Request Function P = f(Qd) P = f(Qd)

Offer Function P = f(Qs) P = f(Qs + t.Qs)

 EXAMPLE
The demand function and the supply function of a
good are given as follows P = -0.50Q + 50 and P =
0.25Q
To these producers, the government imposed a tax
of 20% of the producer's offering price.
1.Find the equilibrium price and quantity at
market after taxes.
2.How much total tax does the government
receive?
3.What is the total tax borne by consumers?
4.What is the total tax borne by producers?
 Settlement
Demand function: P = -0.50Q + 150
Supply function before tax: P = 0.25Q
Balance before tax :
P = -0.50Q + 150
P = 0.25Q -
0 = -0.75Q + 150 0.75Q = 150 Q = 150/0.75 = 200
P = 0.25 x 200 = 50 Balance(200, 50)
Supply function after tax: P = (1 + 20%) x 0.25Q = 0.25Q + 0.05Q
= 0.30Q
New balance (after tax):
P = -0.50Q + 150
P = 0.30Q -
0 = -0.80Q + 150 0.80Q = 150 Q = 150/0.80 = 187.5
P = 0.30 x 187.5 = 56.25 Balance (187.5, 56.25)
 Settlement
Taxes received by the government : (t.Pt.Qt) : (1 + t)
T pem = (20% x 56.25 x 187.5) : (1 + 20%)
= 2,109.375 : 1.2
= 1757.8
OR
Taxes received by the government: t(Ps.Qt) xQt
T pem = (20% x 0.25 x 187.5) x (187.5)
= 9.375 x 187.5
= 1757.8
Taxes paid by consumers : (Pt. – P) Qt
T cons = (56.25 - 50) x 187.5
= 6.25 x 187.5
= 1,171.9
Taxes paid by producers : (P - Ps.Qt) Qt
T prod = (50 – 0.25 x 187.5) x 187.5
= 3.125 x 187.5
= 585.9
 Balance Price and Quantity of goods (Quantity)
PP = 0.30Q

150 St

56.25 EtSP = 0.25Q

50 E

46,88

0 187.5 200 300

 PROBLEMS IN ECONOMICS

It is known that the demand function for

motorcycles is Q = -2P + 240, while the supply
function is P = 4Q + 7.5
If the government collects a tax of 10% of the bid
price level, calculate:
1. Market balance before tax
2. After-tax market balance
3. Taxes received by the government
4. Taxes paid by consumers
5. Taxes paid by producers
 SUBSIDY
The provision of subsidies for goods is
intended so that producers can sell their
goods at lower prices than they should, so
that consumers can meet their needs for
these goods at affordable prices.
Subsidies that function as a reduction in
production costs will make the price of
goods cheaper.
 View chart
P
DS
PsQs A
P BB B Ss B
Ps Es

Q Qs Q
The figure above shows that the total amount of
subsidies that will be enjoyed by consumers is
equal to the price difference between the old and
new balances (consumer subsidies per unit)
multiplied by the number of goods in the new
balance.
S consumers = (P – Ps) Qs

provided that P is the market equilibrium price

before the subsidy, and Ps is the equilibrium
price after the subsidy and Qs is the equilibrium
amount after the subsidy.
Besides that, the calculation can also be done
based on the difference between the subsidy
paid by the government and the subsidy enjoyed
by producers.
S consumers = S governments – S producers

The total subsidy enjoyed by producers is the

remainder of all subsidies not enjoyed by
consumers (producer subsidies per unit)
multiplied by the number of goods in the new
balance.
S producers = {s – (P – Ps )} Qs
Producer subsidies can also be calculated from
the price difference of the supply function on the
balance of goods after subsidies (PsQs) with the
pre-subsidy equilibrium price, multiplied by the
new balance of goods.

S producers = (PsQs – P) Qs
It can also be calculated based on the difference
between the subsidies paid by the government
and those enjoyed by consumers.

S producers = S governments – S consumers

The total subsidy paid by the government is the
amount of the subsidy per unit multiplied by the
number of goods in the new balance.

S pemert = s Qs

It can also be calculated by adding up the

subsidies enjoyed by producers and the
subsidies enjoyed by consumers.

S government = S prod + S consumers

 The rules/patterns used
1. S consumers = (P – Ps) Qs
2. S consumers = S pem - S prod
3. S producers = {s – (P – Ps)}Qs
4. S producers = {PsQs – P )Qs
5. S producers = S pem – S consm
6. S government = s Qs
7. S government = S cons + S prod
 PROBLEMS IN ECONOMICS

It is known that the demand function for

motorcycles is Q = -2P + 300, while the supply
function is Q = 4P
If the government provides a subsidy of Rp. 37.5,-
per unit ,, calculate:
1. Market balance before subsidies
2. Market balance after subsidy
3. The subsidies enjoyed by producers
4. Subsidies enjoyed by consumers
5. Government paid subsidies
6. The graph of the function.
 SETTLEMENT
Is known :
Demand function Q = -2P + 300,
becomes -2P + 300 = Q
P = -1/2Q + 150
The supply function Q = 4P
to 4P = Q
P = 1/4Q
Pd : P = -0.5 Q + 150
Ps : P = 0.25 Q -
0 = -0.75 Q + 150
Q = 150/0.75 = 200 P = 0.25 x 200 = 50
1. Equilibrium occurs at the amount of 200 and the price of
50 rp.
 SETTLEMENT
Is known :
Demand function P = -1/2Q + 150
The supply function P = 1/4Q
Subsidy of Rp. 37.5,- per unit, becomes
Ps : P = 0.25 Q - 37.5
Pd : P =-0.50 Q + 150 –
0 = 0.75 Q – 187.5
Q = -187.5 : -0.75 = 250
P = -0.50x250 + 150
P = -125 +150 P = 25

2. So the market balance after subsidies is

in the amount of 250 units at a price of 25 rupees / unit

 SETTLEMENT
SO :
1. Equilibrium occurs at the amount of 200 and the
price of 50 rp.
2. So the market balance occurs when the number of
goods is 250 units at a price of 25 rp/unit.
3. Subsidies enjoyed by consumers:
(50 rp – 25 rp) x 250 units = Rp. 6,250,-
4. Subsidies enjoyed by producers:
{37.5 – (50 – 25)} x 250 = Rp. 3.125,-
5. Subsidies issued by the government:
Rp. 6,250,- + Rp. 3,125, - = Rp. 9,375,-
or = Rp. 37.5 x 250 units = Rp. 9.375,-
 PRACTICE QUESTIONS YES

It is known that the price supply for a type of

fertilizer can be identified as P = 4Q + 100.
Meanwhile, the demand is P = -2Q + 1,300. If
the government will provide a subsidy of Rp. 50,-
per kilogram of fertilizer, then determine:
1. Market balance before subsidies
2. Market balance after subsidy
3. The subsidies enjoyed by producers
4. Subsidies enjoyed by consumers
5. Government paid subsidies