Demand and supply diagrams become clear when you can change one thing and watch what moves. The tool below takes fictional linear curves, applies a shock and finds the old and new equilibrium. It draws both on one graph and explains the mechanism in neutral terms.
It supports distinguishing a movement along demand from a shift, comparing two demand curves with identical scales and distinguishing a supply shift from a price response. It sits in the learning tools section. This is a fictional model, and nothing you enter is saved or sent.
How do I use the tool?
- Enter the demand intercept a and slope b. Demand is Qd = a − bP, with a and b above zero.
- Enter the supply intercept c and slope d. Supply is Qs = c + dP, with c zero or more and d above zero.
- Choose a shock: no shock, demand increases, demand decreases, supply increases or supply decreases.
- Enter the size of the shock, in units of quantity at every price. A demand shock changes a. A supply shock changes c.
- Press Find equilibrium. Use Reset to restore the starting example.
If a shock would make a parameter negative, the tool asks for a smaller shock. If the curves do not meet at a positive price and quantity, it says so.
How do I read the result?
- Equilibrium working: set a − bP = c + dP, so P = (a − c) ÷ (b + d), then substitute P into demand to find Q.
- Before and after table: the demand and supply equations, the price and the quantity.
- Graph: price on the vertical axis and quantity on the horizontal. The shifted curve is dashed. A solid dot marks the old equilibrium and an open circle marks the new one.
- Mechanism text: which curve shifted, what happened at the old price, and which movement along the other curve followed.
- Key reminder: a price change moves you along a curve, and another factor shifts the whole curve.
Worked example with the starting figures
The tool opens with Qd = 100 − 2P, Qs = 10 + P and a demand increase of 20.
Old equilibrium: 100 − 2P = 10 + P, so 90 = 3P and P = 30. Then Q = 100 − 2 × 30 = 40. Check with supply: 10 + 30 = 40.
Shock: demand rises by 20 at every price, so a becomes 120 and Qd = 120 − 2P.
New equilibrium: 120 − 2P = 10 + P, so 110 = 3P and P = 36.67. Then Q = 120 − 2 × 36.67 = 46.67. Check with supply: 10 + 36.67 = 46.67.
Reading it: demand shifted right. Price and quantity both rose. The rise in quantity is a movement up along the supply curve, because supply itself did not shift.
Try a supply increase of 20. Then c becomes 30 and the new price is 70 ÷ 3 = 23.33, with quantity 53.33. Price falls and quantity rises, the opposite price effect from the demand shock.
What mistake does the tool help me catch?
The classic slip is writing that “the price rise shifts supply to the right”. The price rise is the response, not the cause. In the demand example, supply stays fixed and the market moves along it.
The tool makes this visible: only the dashed line moves, and the other curve stays put. I confuse a curve shift with movement along a curve explains the error with more examples.
Assumptions and limits
- Straight-line curves and made-up numbers. The tool teaches the mechanism and makes no prediction about any real market.
- One shock at a time. Tracing simultaneous shifts without false certainty needs reasoning the tool does not do for you.
- It describes how a model works. It does not endorse any political choice or policy.
- A model assumes other things stay the same. Stating an assumption behind the model is a skill worth practising.
Where to go next
Work through explaining a demand factor in a fictional market, then finding an equilibrium from supplied schedules and the demand relationships mixed practice. The whole subject is mapped in the Economics learning guide.
If you would like a teacher to check your diagrams and written chains, one-to-one Economics tuition can start from the questions you have already attempted.