Supply and Demand

History
John Locke's opened this law in 1691
The phrase "supply and
demand" was first used by
James Denham-Steuart

supply and demand is an economic model of price determination in a market.
The four basic laws of supply and demand are:
If demand increases and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price.
If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower equilibrium price.
If demand remains unchanged and supply increases, a surplus occurs, leading to a lower equilibrium price.
If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher equilibrium price

A supply schedule is a table that shows the relationship between the price of a good and the quantity
The determinants of supply follow:
Production costs, how much a good costs to be produced
The technology used in production, and/or technological advances
A good's own price
Firms' expectations about future prices
Number of suppliers
Supply schedule

Demand schedule
The determinants of demand follow:
Income
Tastes and preferences
Prices of related goods and services
Consumers' expectations about future prices and incomes that can be checked
Number of potential consumers
A demand schedule, depicted graphically as the demand curve, represents the amount of some good that buyers are willing and able to purchase at various prices

Equilibrium
Equilibrium is defined to be the price-quantity pair where the quantity demanded is equal to the quantity supplied, represented by the intersection of the demand and supply curves.

Other markets
In both classical and Keynesian economics, the money market is analyzed as a supply-and-demand system with interest rates being the price.
The money supply may be a vertical supply curve.
The money supply curve is a horizontal line.

Macroeconomic uses of demand and supply
Used to:
relate money supply and money demand to interest rates.
relate labor supply and labor demand to wage rates.