Why Prices Change: Demand & Supply

Demand and supply are the two core ideas that explain how markets work — from why your favourite phone gets cheaper over time to why grocery prices jump after a bad harvest. In this short guide you'll discover the law of demand and the law of supply, how prices reach a market equilibrium, and what causes shifts in curves instead of simple movements along them. By the end you'll be able to read a demand-and-supply diagram, explain real-world examples, and connect these ideas to IB DP Economics concepts like price elasticity and market responses.

• What you'll learn: basic definitions, key determinants, equilibrium and price formation, and simple examples (smartphones, seasonal crops, and tax effects)
• Why it matters: helps explain everyday price changes, policy effects (taxes, subsidies, price controls), and prepares you for IB exam-style questions

Ready to see how a few lines on a graph predict real-world prices? Let's break it down step-by-step.