TUTORIALS & LEARNING RESOURCES

### Core Economic Problem & The Market Mechanism In microeconomics, markets coordinate the allocation of scarce resources through the price mechanism. When prices change, they act as **signals**, **incentives**, and **rationing devices**. #### 1. Demand & The Law of Demand Demand reflects the quantity of a good or service consumers are willing and able to purchase at various price levels over a given period, ceteris paribus. - **Shifts in Demand (PASIFIC):** Population, Advertising, Substitutes' prices, Income, Fashions & tastes, Interest rates, Complements' prices. #### 2. Supply & The Law of Supply Supply is the willingness and ability of producers to offer goods for sale at given prices. - **Shifts in Supply (PINTSWC):** Productivity, Indirect taxes, Number of firms, Technology, Subsidies, Weather conditions, Costs of production. #### 3. Market Equilibrium Equilibrium occurs where = Q_s$. At this point, there is neither excess demand (shortage) nor excess supply (surplus).