ABSTRACT
As a segue into the material of intermediate-level microeconomics, the author begins with some familiar material from people's introductory microeconomics class: market demand, supply, and equilibrium. In any voluntary transaction between a buyer and a seller, trade takes place at some price in between the maximum price a buyer is willing to pay and the minimum price a seller is willing to accept. The difference between a buyer’s maximum price and the actual price paid measures the buyer’s gain from making this trade and is called the individual consumer surplus. A product’s demand depends on the prices of related goods: substitutes and complements. An increase in the price of a substitute good would make consumers buy more of the good under consideration, thereby increasing its demand. An increase in the price of a complement is likely to cause a decrease in the demand for this product.
