Supply and Demand Analysis

Overview

Supply and demand is the foundational model for price determination in markets. It explains how prices emerge from the interaction of buyers (demand) and sellers (supply), and how external shocks or policy interventions shift the equilibrium.

Framework

IRON LAW: Shift vs Movement Along the Curve

A change in PRICE causes movement ALONG the curve (quantity changes).
A change in OTHER FACTORS (income, costs, preferences, technology) causes
the entire curve to SHIFT.

"Demand increased" means the demand CURVE shifted right (more quantity
at every price), NOT that quantity demanded increased due to a price drop.
Confusing these is the #1 error in supply-demand analysis.