The laws of demand and supply
The law of demand states that, other things being equal, quantity demanded falls as price rises (and rises as price falls) -- shown as a downward-sloping demand curve. The law of supply states that quantity supplied rises as price rises -- shown as an upward-sloping supply curve, since higher prices make production more profitable.
Market equilibrium
The equilibrium price is where the demand and supply curves cross -- the price at which quantity demanded exactly equals quantity supplied, with no shortage or surplus.
Example 1: At a price of ₦500, quantity demanded for a good is 200 units and quantity supplied is 350 units. Is the market in equilibrium, and if not, what will likely happen to the price?
The market is not in equilibrium -- supply (350) exceeds demand (200), meaning there's a surplus of 150 units. Sellers will likely lower the price to clear the surplus, moving the market towards equilibrium.
Elasticity of demand
Elasticity of demand measures how responsive quantity demanded is to a price change. Demand is elastic if a small price change causes a large change in quantity demanded (common for luxuries or goods with many substitutes); demand is inelastic if quantity demanded barely changes with price (common for necessities, like basic food staples or medicine).
Example 2: When the price of a particular brand of soft drink rises by 10%, the quantity demanded falls by 25%. Is demand for this drink elastic or inelastic?
Elastic -- the percentage change in quantity demanded (25%) is larger than the percentage change in price (10%), meaning consumers are quite responsive to the price change, likely because substitute drinks are readily available.
Market structures
Perfect competition has many small sellers, identical products, and no single seller able to influence price. A monopoly has a single seller with full control over supply and significant power over price. An oligopoly sits between the two -- a few large firms dominate the market, and each firm's pricing decisions noticeably affect its rivals.