Principles of Microeconomics: Supply and
Demand. (2025 exam prep)
Definitions
Law of Demand: The principle that, all else being equal, as the price
of a good increases, the quantity demanded decreases. Conversely,
as the price decreases, the quantity demanded increases (inverse
relationship).
Law of Supply: The principle that, all else being equal, as the price
of a good increases, the quantity supplied increases. Conversely, as
the price decreases, the quantity supplied decreases (direct
relationship).
Equilibrium: The point where the supply curve and the demand
curve intersect. At this specific price (Equilibrium Price), the quantity
consumers want to buy exactly equals the quantity producers want to
sell (Equilibrium Quantity).
, Opens in a new window
Getty Images
Supply and demand curves diagram showing equilibrium point on
white background
Surplus (Excess Supply): A market condition that occurs when the
current price is above the equilibrium price, causing the quantity
supplied to be greater than the quantity demanded.
Demand. (2025 exam prep)
Definitions
Law of Demand: The principle that, all else being equal, as the price
of a good increases, the quantity demanded decreases. Conversely,
as the price decreases, the quantity demanded increases (inverse
relationship).
Law of Supply: The principle that, all else being equal, as the price
of a good increases, the quantity supplied increases. Conversely, as
the price decreases, the quantity supplied decreases (direct
relationship).
Equilibrium: The point where the supply curve and the demand
curve intersect. At this specific price (Equilibrium Price), the quantity
consumers want to buy exactly equals the quantity producers want to
sell (Equilibrium Quantity).
, Opens in a new window
Getty Images
Supply and demand curves diagram showing equilibrium point on
white background
Surplus (Excess Supply): A market condition that occurs when the
current price is above the equilibrium price, causing the quantity
supplied to be greater than the quantity demanded.
