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Supply, demand and price
1:311-page summary: Supply, demand and price
- Demand and supply describe quantities at different prices.
- The curves cross at equilibrium. Hold other conditions constant when using this simple model.
- Less supply can raise equilibrium price and lower equilibrium quantity.
- A price change alone means movement along a curve, not a shift of that curve.
Read the transcript
Supply and demand help explain prices. These are simple models: real markets can have several changes happening at the same time.
Demand describes quantities buyers are willing and able to buy at different prices. Other things equal, a lower price usually means more quantity demanded.
Supply describes quantities sellers are willing to offer at different prices. Other things equal, a higher price usually encourages more quantity supplied.
On a simple graph, price is vertical and quantity is horizontal. The crossing of supply and demand is the equilibrium.
Imagine a freeze damages the orange crop. Supply decreases. If demand stays the same, the model predicts a higher equilibrium price and lower quantity.
Now imagine more buyers want oranges. If supply stays the same, increased demand predicts a higher equilibrium price and higher quantity.
Ask what changed, which curve shifts, and what is being held constant. A price change alone moves along a curve; it does not shift that curve.
Captions are on by default. AI narration: Qwen3-TTS, Sohee (English). Sources & media credits
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