How to Construct an Economics Supply & Demand Curve

Economists recognize supply and demand as two related factors that affect the market price of products. The curves that represent supply and demand are often plotted on the same graph to visually identify the point where the curves intersect. This is the point of equilibrium between producer supply and consumer demand. According to the law of supply and demand, the price of marketed goods moves toward a point of equilibrium.

Instructions

    • 1

      Collect data for the supply curve and for the demand curve. Each price point will yield a corresponding product quantity for each curve. Your data is real-life results based on how market participants respond to price moves. The data can also be given by a company that needs consulting services or as part of an academic exercise.

    • 2

      Prepare a two-axis graph and label the vertical axis as the product price and the horizontal axis as the product quantity. As a convention in representing supply and demand curves, the x or horizontal axis is labeled Quantity and the y or vertical axis is labeled Price.

    • 3

      Mark the axes with numbers in the range of prices and quantities for which you have data. The intersection of the axes mark a point of zero price and zero quantity. Quantity and Price values increase as you move away from the intersection of the axes. In mathematics, the intersection of the axes is known as the origin.

    • 4

      Organize your data into two sets, one for the supply curve and one for the demand curve. Further organize the data as value pairs representing a price value and the corresponding product quantity.

    • 5

      Plot the data points for the supply and demand functions on the same graph. Each point on the graph is defined by two coordinate values. For each function, plot the value pairs. Use the first coordinate (value on the x axis) to identify product quantity and the second coordinate (value on the y axis) to identify the corresponding price. Each function will ultimately be represented by a curve on the graph.

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