This chapter introduces the readers to the supply and demand model and its numerous applications to the real world. After reading this chapter and working on the practice questions, the learners should be able to understand how the equilibrium price and quantity are determined; construct graphs to show the effect of changes in supply and/or demand on the equilibrium price and quantity; recognize the presence and estimate the magnitude of a shortage or a surplus when the market is not in equilibrium; and most importantly, apply the supply and demand model to real-world examples.