What you'll learn
How price is determined in a market.
Key ideas
- Demand falls as price rises; supply rises as price rises.
- The equilibrium price is where demand meets supply.
- Shortages (excess demand) and surpluses (excess supply).
- Non-price factors (e.g. income) shift the curves.
Exam tips
- Draw and label demand/supply diagrams.
- Distinguish a movement along from a shift.
Common mistakes
- Confusing shifts with movements.
- Muddling shortages and surpluses.