Skarp
Microeconomics Week 2: Supply, Demand, and Market Equilibrium
This course examines how buyers and sellers shape competitive markets through supply and demand. Students will interpret market curves, calculate equilibrium, and predict how economic changes affect prices and quantities.
The first lecture plays free — no account needed.
What you'll learn
- Students will be able to interpret demand schedules and demand curves.
- Students will understand the difference between individual demand and market demand.
- Students will be able to distinguish a change in quantity demanded from a change in demand.
- Students will be able to identify the major determinants of demand.
- Students will understand how substitutes and complements influence demand.
- Students will be able to predict the direction of a demand-curve shift.
- Students will be able to interpret supply schedules and supply curves.
- Students will understand why quantity supplied generally increases with price.
- Students will be able to distinguish a change in quantity supplied from a change in supply.
- Students will be able to locate equilibrium on a supply-and-demand graph.
Prerequisites
- Basic understanding of markets
- Ability to read simple graphs
- Law of demand
- Movement along the demand curve
- Demand schedules and curves
- Basic graph interpretation
Course Content
5 modules · 21 min total
Reading the Demand Curve
Why do consumers purchase less when prices rise? The demand curve reveals how prices, preferences, income, and expectations shape purchasing decisions.
Discovering What Shifts Demand
A product's price is not the only force guiding consumer choices. Changes in income, tastes, expectations, and related goods can transform an entire market.
Understanding the Supply Curve
Behind every product is a seller deciding whether production is worthwhile. The supply curve connects those decisions to costs, technology, expectations, and market prices.
Finding Market Equilibrium
At one special point, buyers' plans meet sellers' plans. That intersection explains how markets coordinate decisions—and what happens when the price moves away from balance.
Predicting Market Changes
A new technology, changing preference, or rising input cost can unsettle a market in seconds. Comparative statics offers a systematic way to predict the new price and quantity.
Read the Textbook
Read every chapter for free, right here in your browser.
Demand Is a Price-Quantity Relationship
A demand schedule lists the quantity of a good consumers are willing and able to buy at different prices, holding other relevant factors constant.
| Price per smoothie | Quantity demanded per week | |---|---:| | $8 | 10 | | $6 | 20 | | $4 | 35 | | $2 | 55 |
Study Flashcards
Key concepts from this course as flashcard pairs.
Reading the Demand Curve
Demand schedule
A table showing quantities consumers are willing and able to buy at different prices, holding other factors constant.
Law of demand
All else equal, a higher price leads to a lower quantity demanded, and a lower price leads to a higher quantity demanded.
Change in quantity demanded
A movement along the same demand curve caused by a change in the good's own price.
Change in demand
A shift of the entire demand curve caused by a non-price determinant, such as income, preferences, expectations, related-good prices, or number of buyers.
Market demand
The total quantity demanded by all buyers at each price; it is found by horizontally summing individual quantities.
Substitute and complement
A substitute is an alternative product, such as tea for coffee. A complement is used with another product, such as printers and ink.
Discovering What Shifts Demand
Demand
The quantities consumers are willing and able to buy at various prices, holding other relevant factors constant.
Quantity demanded
The amount consumers buy at one specific price. A change in the product's own price changes quantity demanded.
Demand shift
A rightward or leftward movement of the entire demand curve caused by a nonprice determinant.
Normal good
A good for which demand increases when consumer income increases.
Inferior good
A good for which demand decreases when consumer income increases.
Substitutes
Goods that can replace one another. A higher price of one tends to increase demand for the other.
+2 more flashcards
Understanding the Supply Curve
Law of supply
Holding other factors constant, a higher price is associated with a higher quantity supplied, and a lower price with a lower quantity supplied.
Supply schedule
A list showing the quantity supplied at each possible price over a specified period.
Quantity supplied
The amount sellers are willing and able to offer at one particular price; an own-price change causes movement along a curve.
Supply
The complete relationship between price and quantity supplied; a non-price determinant changes it and shifts the curve.
Market supply
The total quantity supplied by all sellers at each price, found by adding individual quantities at that price.
Finding Market Equilibrium
Market equilibrium
A situation in which planned quantity demanded equals planned quantity supplied.
Equilibrium price
The price at which quantity demanded equals quantity supplied; also called the market-clearing price.
Equilibrium quantity
The quantity bought and sold at the equilibrium price.
Shortage
Excess demand: quantity demanded exceeds quantity supplied at a given price.
Surplus
Excess supply: quantity supplied exceeds quantity demanded at a given price.
Price adjustment
The tendency for shortages to create upward pressure and surpluses to create downward pressure on price.
Predicting Market Changes
Comparative statics
Analysis that compares an initial equilibrium with a new equilibrium after an external change.
Demand shift
A change in the quantity buyers want at every price; the entire demand curve moves.
Supply shift
A change in the quantity sellers offer at every price; the entire supply curve moves.
Movement along a curve
A change in quantity demanded or supplied caused by a change in the good's own price, with the curve unchanged.
Ambiguous outcome
An outcome whose direction cannot be determined from the information given because different shifts have opposing effects.
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