Start from the two facts everything else is built on. The law of demand: holding everything else fixed, a lower price makes buyers want more of a good, so the demand curve slopes down, quantity demanded, Qd, falls as price P rises. The law of supply: holding everything else fixed, a higher price makes sellers willing to offer more, so the supply curve slopes up, quantity supplied, Qs, rises as P rises. Write both as linear functions of price and you have a solvable system: Qd = a − bP and Qs = c + dP, with a, b, c, d > 0. Equilibrium is the single price at which the quantity buyers want to buy exactly equals the quantity sellers want to sell, set Qd = Qs and solve for P*, then substitute back for Q*. There is nothing more mysterious in "the market clears" than that one algebraic step, and you will do it, by hand and in Python, in Worked Example 1.
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What shifts supply and demand curves?
The single habit that separates a clean read from a confused one: a movement along a curve is caused only by a change in that good's own price; anything else that changes quantity demanded or supplied (income, the price of a related good, a cost shock, a policy change, a season) shifts the entire curve. A demand curve shifts right (more is demanded at every price) when income rises for a normal good, when a substitute's price rises, when a complement's price falls, when tastes move toward the good, or when buyers expect the price to rise later. A supply curve shifts right (more is supplied at every price) when an input cost falls, when technology improves, when the number of sellers rises, or when a subsidy lands. Comparative statics is simply re-solving the same system after one curve has shifted, and reading the direction of the change in P* and Q* off the new intersection, a skill you will use for the rest of this program every time a demand or supply shock hits a company you cover.
What are consumer surplus and producer surplus?
Two areas under the curves complete the toolkit, because they turn "price and quantity" into a statement about welfare, who benefits, and by how much. Consumer surplus (CS) is the area between the demand curve and the market price, up to the traded quantity: the gap between the maximum price buyers would have paid for each unit (read off the inverse demand curve) and the price they actually paid, summed across every unit traded. For a linear demand curve it is simply the triangle ½ × (choke price − P*) × Q*, where the choke price is the price at which quantity demanded falls to zero (Q = 0 on the demand curve). Producer surplus (PS) is the mirror image: the area between the market price and the supply curve, ½ × (P* − floor price) × Q*, where the floor price is where quantity supplied falls to zero. Total surplus is their sum, and it is the entire welfare yardstick this module uses from here forward, monopoly's deadweight loss is nothing but a fall in total surplus relative to a stated counterfactual, computed the same way.