CLEP Microeconomics covers the fundamental concepts of microeconomic theory, including supply and demand, market structures, and the behavior of consumers and firms.
Supply and demand are the heartbeats of any market economy. They determine prices, quantities, and how resources are allocated.
Demand represents how much of a good or service people want at different prices. When something's price falls, people usually want more of it—that's the law of demand. The demand curve slopes downward, showing this relationship.
Supply is how much of a good or service is offered for sale at various prices. When prices go up, suppliers want to sell more—the law of supply. The supply curve slopes upward.
Where supply meets demand is called equilibrium. It's the price where what buyers want to buy matches what sellers want to sell. No shortage, no surplus—just balance.
When something changes—like a new trend (demand) or a technology upgrade (supply)—these curves shift. Understanding why they shift helps explain real-world price changes.
Knowing about supply and demand helps you understand why gas prices soar, why new game consoles sell out, or why strawberries are cheaper in summer.
When the latest sneaker drops, demand skyrockets and prices go up until supply catches up.
A bad harvest means less supply of oranges, raising the price at the grocery store.
Supply and demand explain how prices are set and goods are allocated in markets.