An Exploration of the Relationship Between Supply and Demand in Determining Market Equilibrium
DOI:
https://doi.org/10.65310/430h0224Keywords:
Consumer behavior, Demand and supply, Market equilibrium, Price formation, Supply adjustmentsAbstract
Market price fluctuations reflect the interaction between consumer demand and producer supply under changing economic conditions. This study aimed to examine the relationship between demand and supply in determining market equilibrium, explain the formation of equilibrium prices and quantities, and identify factors influencing market adjustments. A descriptive qualitative literature review was conducted using five relevant scientific articles as the core sources of secondary data. Data were examined through descriptive content analysis involving identification, thematic classification, comparison, and interpretive synthesis, supported by illustrative numerical schedules. The findings indicated that quantity demanded generally decreased as prices increased, whereas quantity supplied increased under constant non-price conditions. The illustrative model identified an equilibrium price of Rp60,000 and an equilibrium quantity of 300 units. Prices below equilibrium generated excess demand, while prices above equilibrium produced excess supply. Consumer income, preferences, production costs, technology, and product availability were identified as determinants capable of shifting market equilibrium. Simultaneous changes in demand and supply introduced uncertainty concerning equilibrium price adjustments. The study concluded that market equilibrium resulted from interdependent consumer and producer decisions. Its contribution lies in integrating equilibrium formation, market imbalances, and adjustment mechanisms, although the findings remain conceptual rather than empirically estimated.
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