Week 4 — Supply & Market Equilibrium

Why this matters

A farm stand owner watching a frost push up the price of strawberries and a nurse weighing job offers as new graduates enter the field are both reading supply and equilibrium.

In plain language

This week is about sellers and about the price a market settles on. When something sells for more, the people who make it want to offer more of it. Economists call that pattern the law of supply (the rule that a higher price means a larger amount offered, with everything else held still). When the sellers' plans meet the buyers' plans from last week, the market finds its equilibrium (the one price where the amount people want to buy matches the amount offered for sale). The big skill this week is predicting what happens to that price, and to the amount sold, when something changes.

• Already covered: Week 1 taught opportunity cost and ceteris paribus; Week 3 built the demand side of the course's market.
• This week: the law of supply, the supply curve and its shifts, equilibrium, shortages and surpluses, and shifts of one or both curves.
• How they connect: supply follows the same movement-or-shift logic as demand, and the two curves together set the price.
• Where we're going next: Week 5, Elasticity, measures how strongly quantity responds to a price change.

Focus

What sets a market's price, and where do the price and quantity land when something changes?

By the end of this module, you should be able to:

• [ ] build a supply schedule from a rule and describe its curve in words
• [ ] solve Qd = Qs for the equilibrium price and quantity
• [ ] name a shortage below equilibrium and a surplus above it
• [ ] name the curve that shifts, its direction, and the new price and quantity

To-do

Plan your week

1. Read Chapter 4 (40–50 minutes), then the lecture and slides.
2. Work the tutorial (60–90 minutes) and practice set (15–25 minutes).
3. Do the Model Workshop (90 minutes), discussion, and assignment.
4. Take the quiz.

This week's checkpoint: say which curve moves when an input price rises, which way, and what happens to the price.

You've got this

Take it in order, and ask your instructor early.

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