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This subtopic introduces the concept of market equilibrium, where the quantity of a good or service demanded by consumers equals the quantity supplied by producers. Learners will also learn how to determine the equilibrium price and quantity through graphical analysis and numerical methods. The intersection of demand and supply curves will be used to illustrate how markets self-adjust to reach equilibrium.

This subtopic explores how shifts in demand and supply affect market equilibrium. Students will analyze different scenarios—such as technological advancements, consumer preferences, and natural disasters and interpret the resulting changes in equilibrium price and quantity. Emphasis will be placed on using diagrams and comparative statics to evaluate market outcomes.

Students will examine why and how governments intervene in markets, including efforts to correct market failures, protect consumers, and ensure social equity. This topic introduces various forms of intervention and assesses their impacts on market outcomes and efficiency. There are:

1. Maximum Price (Price Ceiling)
This section focuses on price ceilings—legally imposed maximum prices—and their implications for markets. Students will evaluate the rationale behind policies like rent control and price caps on essential goods and analyze the resulting effects, such as shortages and black markets.

2. Minimum Price (Price Floor)
Here, learners will study price floors—minimum allowable prices set above equilibrium—such as minimum wage laws and agricultural price supports. The discussion includes analysis of resulting surpluses, government purchasing, and labor market effects.

3. Subsidy and Indirect Taxes
This sub-subtopic introduces the concepts of subsidies and indirect taxes (e.g., sales tax, excise duties) and their impact on supply, demand, and market equilibrium. Students will learn to calculate and graph the incidence of taxes and benefits of subsidies and discuss efficiency and equity implications.

This final subtopic explores how Islamic economics views price control and government intervention. Learners will explore the price control from an Islamic perspective.