Welcome! Today we'll learn how to draw a supply and demand graph. This fundamental economic tool shows how price and quantity interact in a market. We start with axes labeled Price and Quantity, then add downward-sloping demand and upward-sloping supply curves that intersect at equilibrium.
Step one is to draw the axes. Start by drawing two perpendicular lines - a vertical axis for Price and a horizontal axis for Quantity. Make sure to label both axes clearly and add scale numbers. The vertical axis represents price levels, while the horizontal axis shows quantity amounts. This foundation is crucial for accurately plotting supply and demand curves.
Step two is drawing the demand curve. This is a downward-sloping line that goes from the upper left to the lower right. The demand curve shows the inverse relationship between price and quantity - when prices are high, consumers demand less, and when prices are low, they demand more. Make sure to label this curve clearly as 'Demand' or simply 'D'.
Step three is drawing the supply curve. This is an upward-sloping line that goes from the lower left to the upper right. The supply curve shows the positive relationship between price and quantity supplied - when prices are high, producers are willing to supply more, and when prices are low, they supply less. Label this curve as 'Supply' or 'S'. Now you can see both curves on the same graph.
The final step is marking the equilibrium point. This is where the supply and demand curves intersect, showing market balance. Draw a horizontal line from this intersection to the price axis and label it Pe for equilibrium price. Draw a vertical line to the quantity axis and label it Qe for equilibrium quantity. This point represents the price and quantity where supply equals demand - the natural balance of the market.