How to
How to make a supply and demand graph
A supply and demand graph shows how a market settles on a price. Quantity runs along the bottom and price up the side. The demand curve slopes down, because buyers want more at lower prices; the supply curve slopes up, because sellers offer more at higher prices. The point where they cross is the equilibrium.
- Draw the demand curve. Give it a label, such as D, and two points: a quantity and a price at each end. A line that slopes down is treated as demand.
- Draw the supply curve. Add a line that slopes up, labeled S. The equilibrium point E, its price and its quantity appear where the two cross, with dotted guides to both axes.
- Show a shift. Add a second demand or supply line, such as D1 to the right of D for a rise in demand. An arrow shows the direction and the new equilibrium is marked E2.
- Add surplus or a price control. Shade consumer and producer surplus, or set a price ceiling or floor to see the shortage or surplus it creates.
- Export. Download a PNG for homework and slides, or an SVG to edit or print.
Reading the equilibrium
At the equilibrium price, the quantity buyers want equals the quantity sellers offer, so nothing pushes the price up or down. In the sample, demand rises from D to D1: at the old price buyers now want more than sellers offer, the price climbs, and the market settles at a higher price and a larger quantity, from E1 to E2.
Consumer and producer surplus
Consumer surplus is the triangle between the demand curve and the equilibrium price: what buyers would have paid above what they did pay. Producer surplus is the triangle between the price and the supply curve. Together they are the total gain from trade, which is largest at the equilibrium.
Price ceilings and floors
A price ceiling below the equilibrium, such as rent control, means buyers want more than sellers offer: a shortage. A price floor above it, such as a minimum price, means sellers offer more than buyers want: a surplus. The gap is measured and labeled on the chart. A ceiling above the equilibrium, or a floor below it, changes nothing, and the maker tells you so.
Tip
Turn off Numbers on the axes for a clean diagram like the ones in an economics textbook, where only the shape and the labels matter.
Questions people ask
How do you draw a supply and demand graph?
Put quantity on the horizontal axis and price on the vertical axis. Draw demand sloping down from left to right and supply sloping up. Where they cross is the equilibrium: the market price and the quantity bought and sold. Here you type two points for each line and the crossing point is found and labeled for you.
Why does the demand curve slope downward?
Because of the law of demand: when the price of a good falls, people buy more of it, other things staying the same. A lower price makes it cheaper than alternatives and stretches buyers' budgets further. The supply curve slopes the other way, since a higher price makes it worth producing more.
What is the difference between a shift and a movement along the curve?
A change in the good's own price moves you along the curve. A change in anything else, such as income, tastes, the price of a related good or production costs, shifts the whole curve. Add a second demand or supply line to show a shift; the arrow and the new equilibrium are drawn for you.
Can I use it for other economics graphs?
It covers the supply and demand family: shifts of either curve, several equilibria, consumer and producer surplus, and price ceilings and floors with the shortage or surplus they cause. Turn off the numbers for a clean textbook-style sketch. For data over time, such as prices by month, use the line graph maker instead.