Firms respond to demand and supply pressures in ways other than changing observed prices. If observed equilibrium prices and quantities don't match your supply/demand analysis, look at other dimensions of the market or for other forces that may affect price and quantity.
The determination of prices of currencies—the determination of foreign exchange rates—can be determined by supply and demand analysis, in the same way supply and demand analysis applies to any other good.
By minding your Ps and Qs—the shifts of and movements along curves—you can describe almost all events in terms of supply and demand.
A price ceiling is a government-imposed limit on how high a price can be charged. Price ceilings below market price create shortages.
A price floor is a government-imposed limit on how low a price can be charged. Price floors above market price create surpluses.
Taxes and tariffs paid by suppliers shift the supply curve up by the amount of the tax or tariff. They raise the equilibrium price (inclusive of tax) and decrease the equilibrium quantity.
Quantity restrictions increase equilibrium price and reduce equilibrium quantity.
In a third-party-payer market, the consumer and the one who pays the cost differ. Quantity demanded, price, and total spending are greater when a third party pays than when the consumer pays.
