Supply, demand and how prices form

Demand and supply describe different sides

In the Federal Reserve Education model, demand is the quantity buyers are willing and able to buy at different prices during a period; supply is the quantity sellers are willing and able to offer. A price change moves quantity along a curve in the simplified model. A change in another condition can shift the curve.

Equilibrium in this model is where planned quantity supplied and demanded match. It is a teaching tool, not proof that one objectively correct price exists in every market.

Evidence: Demand and movement versus shifts · Supply and movement versus shifts · Simplified market equilibrium

Used for the simplified classroom definition of demand and the difference between a price change and other conditions; not an empirical model of crypto trading.

Used for the simplified classroom definition of supply and shifts; it does not establish a BNB or token supply schedule.

Defines an educational equilibrium as the point with no shortage or surplus in its simplified model; the fictional schedule is not live market data.

Solve the fictional schedule

All entries below are made-up units per period. At price 3 MU, quantity demanded and supplied both equal 5 units, so the simple schedule meets at (price 3, quantity 5). This is the model's equilibrium for the listed schedule, not a market observation.

Evidence: Demand and movement versus shifts · Supply and movement versus shifts · Simplified market equilibrium

Used for the simplified classroom definition of demand and the difference between a price change and other conditions; not an empirical model of crypto trading.

Used for the simplified classroom definition of supply and shifts; it does not establish a BNB or token supply schedule.

Defines an educational equilibrium as the point with no shortage or surplus in its simplified model; the fictional schedule is not live market data.

A curve shift is different from moving along it

For the listed fictional schedule, the straight-line equations are Qd = 11 - 2P and Qs = 2P - 1. If a separate hypothetical condition shifts demand up by 2 units at each price, Qd becomes 13 - 2P. Setting Qd = Qs gives 13 - 2P = 2P - 1, so P = 3.5 and Q = 6. The answer depends on the invented straight-line assumption.

A change in the good's own price alone is represented as movement along demand or supply. A change in income, preferences, input costs, number of sellers or expectations may shift a curve, depending on the model. The shift example is not evidence about BNB and is not a price prediction.

Evidence: Demand and movement versus shifts · Supply and movement versus shifts · Simplified market equilibrium

Used for the simplified classroom definition of demand and the difference between a price change and other conditions; not an empirical model of crypto trading.

Used for the simplified classroom definition of supply and shifts; it does not establish a BNB or token supply schedule.

Defines an educational equilibrium as the point with no shortage or surplus in its simplified model; the fictional schedule is not live market data.

Crypto markets use more than one price mechanism

On a centralized Binance Spot order book, buyers' bids and sellers' asks can match; the last executed trade is not a promise for the next order. An AMM pool uses a protocol-specific reserve and fee mechanism instead. Markets can differ by venue, network, token contract, time and depth. Do not treat one classroom curve as the complete price formation of BNB or a token.

Evidence: Simplified market equilibrium · Centralized exchange order-book concept · Uniswap pool, LP-share and version concepts

Defines an educational equilibrium as the point with no shortage or surplus in its simplified model; the fictional schedule is not live market data.

Binance warns educational material may be outdated; only used for order book vs AMM distinction.

Uniswap-specific; version mechanics are not universal and do not prove any pool is live.

Exercise: recompute a shifted schedule

Use the fictional equations from the table. Demand shifts up by 2 units at every price. Solve for the new intersection and say why this number is not a prediction.

Evidence: Demand and movement versus shifts · Supply and movement versus shifts

Used for the simplified classroom definition of demand and the difference between a price change and other conditions; not an empirical model of crypto trading.

Used for the simplified classroom definition of supply and shifts; it does not establish a BNB or token supply schedule.