Diagrams for Supply and Demand

This is a collection of diagrams for supply and demand. It is mainly for my benefit, so when creating a post, like the price of tea (or when I’m teaching online) I can easily find a suitable diagram to illustrate what is happening.

s=d

Demand curve

  •   movement-along-demand A contraction on the demand curve is due to higher price leading to lower demand
  • An extension on the demand curve is due to lower price leading to higher demand.

The supply curve

movement-along-demand

  • A higher price causes an extension along the supply curve (more is supplied)
  • A lower price causes a contraction along the supply curve (less is supplied)

Supply Shifts to the left

fall-supply-oil-price-ar

In this diagram the supply curve shifts to the left. It leads to a higher price and fall in quantity demand. The supply curve may shift to the left because of:

  • Higher costs of production
  • Higher taxes
  • Fall in productivity

Supply and Demand Shift Right

 

In this diagram, supply and demand have shifted to the right. This has led an increase in quantity (Q1 to Q2) but price has stayed the same.

It is possible, that if there is an increase in demand (D1 to D2) this encourages firms to produce more and so supply increases as well.

Diagram showing Increase in Price

rise-in-price

In this diagram, we have rising demand (D1 to D2) but also a fall in supply. The effect is to cause a large rise in price.

For example, if we run out of oil, supply will fall. However, economic growth means demand continues to rise.

Increase in Demand

increase-in-demand

An increase in demand leads to higher price and higher quantity.

Increase in demand with inelastic supply

inelastic-supply-rise-in-demand

A Fall in Demand

fall-in-demand

Fall in demand increase supply

rise-in-supply-fall-demand-arrows

Fall in Supply

fall-supply-oil-price-ar

Fall in supply causing lower quantity and higher price.

Increase in supply – inelastic demand inelastic-demand-volatile-prices An increase in supply when demand is inelastic only causes a small rise in demand.

Market equilibrium

market-equilibrium Excess supply involves price above the equilibrium excess-supply-move-to-eq

Excess demand

excess-demand-move-to-eq-id

 

Increase in demand

increase-in-demand

Rise in demand and rise in supplt long-term-supply-increases

Increase in demand causes supply to increase in long term.

Price set below the equilibrium (football)

price-below-equilibrium

Inelastic supply and bigger increase in demand

demand-increase-greater-supply

UK Housing market has often seen demand increase at a faster rate than supply, causing price to rise.

supply-increase-more-than-demand2

Supply increase same as demand. supply-increase-demand-same

Elasticity

The effect of a subsidy depends on the elasticity of demand

Subsidy-elasticity The effect of a tax depends on elasticity of demand

tax-depends-elasticity

The effect of rise in demand depends on elasticity of supply

elasticity-of-supply-effect-demand

 

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23 thoughts on “Diagrams for Supply and Demand”

  1. thank you so much, can you please assist if the quantity stay the same and demand increase so as price please show me how to plot in a diagram

    Reply

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