Interactive Supply & Demand Diagram

Shift curves, model indirect taxes and subsidies, and visualise consumer and producer surplus. Built for AQA, Edexcel and OCR A Level Economics.

Diagram:Supply & Demand AD/AS PPF Monopoly Perfect Competition Labour Market Externalities Phillips Curve Trade & Tariffs Natural Monopoly Economy Dashboard MONIAC Domino Chains

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Demand

Shift curve (←→)0.0

Intercept (aD₀)+90.0

Price Elasticity (bD)+1.0

Unit elastic (PED = 1)

Supply

Shift curve (←→)0.0

Intercept (aS₀)+10.0

Price Elasticity (bS)+1.0

Unit elastic (PES = 1)

Price (P*)

50.0

Quantity (Q*)

40.0

Total expenditure (P×Q)

2000

Free-market equilibrium: price = 50.0, quantity = 40.0. The market clears — quantity supplied equals quantity demanded.

Supply and demand analysis explains how prices are set in a competitive market and why they change. This tool lets you shift and reshape the demand and supply curves, add indirect taxes, subsidies and minimum or maximum prices, and shade consumer surplus, producer surplus and deadweight loss.

How to use this tool

On the Curves tab, use “Shift curve (←→)” to move demand or supply, and the intercept and elasticity sliders to change each curve’s position and slope. The “Elastic” and “Inelastic” buttons set a shallow or steep curve quickly.
Click “+ Add D₂” or “+ Add S₂” to draw a second curve; the tool labels the old and new equilibria E₁ and E₂. “Pin baseline” on the Analysis tab keeps the starting curves on screen as dashed lines.
On the Policy tab, add a unit tax or an ad valorem tax, a subsidy, a minimum price (floor) or a maximum price (ceiling). A tax and a subsidy cannot be applied at the same time.
On the Analysis tab, tick “Consumer surplus”, “Producer surplus” and “Deadweight loss” to shade them, and “Show price adjustment” to see how price moves when a floor or ceiling binds. The readout gives price, quantity, total expenditure and the PED and PES values.

What to notice

A change in the good’s own price causes a movement along the demand or supply curve. A change in any other determinant, such as income, the price of a substitute, costs of production or technology, shifts the whole curve.
When demand increases, the curve shifts right. At the old price there is excess demand, so the price rises until a new equilibrium is reached at a higher price and quantity.
The price mechanism allocates resources through three functions: a rising price signals that consumers want more, gives producers an incentive to supply more, and rations the good among the buyers most willing to pay.
Consumer surplus is the area below the demand curve and above the price; producer surplus is the area above the supply curve and below the price. In the tool both are shaded at the free-market equilibrium.
An indirect tax drives a wedge between the price consumers pay and the price producers receive. The more inelastic side of the market bears the larger share of the tax. The tax revenue rectangle and the deadweight loss triangle show its effect on the market.
A binding maximum price creates a shortage (excess demand); a binding minimum price creates a surplus (excess supply).

Using it in the exam

Label the axes price (P) and quantity (Q), label the original curves D₁ and S₁ and any new curve D₂ or S₂, and mark both equilibria with P₁, Q₁ and P₂, Q₂. Use an arrow to show the direction of the shift. Then explain the change as a chain: name the determinant that has changed, say which curve shifts and why, describe the excess demand or supply at the old price, and explain how the price mechanism moves the market to the new equilibrium. For a tax question, show the price paid by consumers, the price received by producers, the tax revenue and the deadweight loss.

Evaluate: The basic model assumes a competitive market, rational consumers and producers, and that other things stay equal. In reality several determinants often change at once, so the overall effect on price or quantity can be ambiguous, and adjustment takes time, especially for supply in markets such as agriculture or housing. The size of any change in price and quantity depends on the price elasticities of demand and supply, so a judgement should consider how elastic each curve is likely to be.

Revise the theory

Revise the theory behind this tool in our Edexcel revision notes:

Practise drawing the static versions you will need in the exam:

Frequently asked questions

What is the difference between a shift and a movement along a demand curve?

A movement along the demand curve is caused only by a change in the good’s own price: a fall in price causes an extension of demand and a rise causes a contraction. A shift of the whole curve is caused by a change in another determinant, such as income, tastes or the price of related goods, which changes the quantity demanded at every price.

What are the functions of the price mechanism?

The price mechanism has three functions. Prices act as a signal, showing producers and consumers where resources are wanted. They create an incentive, because higher prices make supplying a good more profitable. And they ration scarce goods, because when supply is limited a higher price reduces the quantity demanded to match what is available.

Who pays an indirect tax: consumers or producers?

The incidence of an indirect tax is shared between consumers and producers, and the split depends on price elasticity. If demand is more price inelastic than supply, consumers bear most of the tax through a higher price. If supply is more inelastic, producers bear most of it through a lower price received. Who legally pays the tax does not decide who bears it.