Supply and Demand
Shift curves, set price floors and ceilings, and apply economic shocks.
Think you know when each curve moves? Try the draw-the-graph FRQ drills and get graded on it.
What this graph shows
This is the core supply and demand model, the market diagram nearly every intro economics unit builds on. The blue demand curve slopes down and the red supply curve slopes up, and where they cross is the market equilibrium, the one price and quantity where the amount buyers want equals the amount sellers offer.
The interactive lets you drag either curve, or use the arrow buttons to shift Demand and Supply left or right. You can flip on a price floor or price ceiling and drag it to a level, turn on a Movement Along Curve tool to compare quantity demanded and quantity supplied at any price, and apply preset Economic Shocks like Oil Price Spike or Consumer Income Rises to see which curve moves and why.
How to read it
Price is on the vertical axis and quantity on the horizontal. Read equilibrium where the blue demand line and red supply line intersect: trace straight left from that dot for the equilibrium price, and straight down for the equilibrium quantity. The live readout below the graph reports that same P and Q. When a price floor or ceiling is active, the shaded band between the demand and supply lines at that price is the surplus or shortage.
Three things to try
- Click the Oil Price Spike shock and watch the red supply curve shift sharply left (with demand nudging slightly left too), then read the new intersection to confirm price rises and quantity falls.
- Turn on Movement Along Curve and slide the price up above equilibrium, and notice the graph shade a surplus because quantity supplied now exceeds quantity demanded.
- Press the D arrow buttons to shift demand right, then left, and watch equilibrium price and quantity move in the same direction as demand each time.
Common questions
Where is equilibrium on a supply and demand graph?
Equilibrium is the single point where the demand curve and supply curve cross. Trace horizontally from that point to the vertical axis for the equilibrium price, and vertically down to the horizontal axis for the equilibrium quantity.
What is the difference between a shift and a movement along the curve?
A shift moves the entire curve to a new position because something other than price changed, like income or input costs. A movement along the curve is just sliding to a different point on the same curve because the price itself changed, which the Movement Along Curve tool lets you trace directly.
How do you read a shortage or surplus on the graph?
Pick a price and compare quantity demanded to quantity supplied at that price. Above equilibrium you get a surplus because supply outruns demand, and below equilibrium you get a shortage. The tool shades this gap and labels it for you.
Supply and Demand: key terms
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