Supply & Demand
Change a market’s demand or supply, compare curve shapes, and see how equilibrium moves.
Demand Linear demand falls by a constant quantity as price rises. Constant-elasticity demand keeps the same percentage responsiveness at every price. Exponential demand changes proportionally with each price-index increment, so its elasticity varies with price. All three share the same reference equilibrium and starting elasticity.
A positive shift means more demand at every price.
Supply Linear supply rises by a constant quantity as price rises. Constant-elasticity supply keeps the same percentage responsiveness at every price. Exponential supply changes proportionally with each price-index increment, so its elasticity varies with price. All three share the same reference equilibrium and starting elasticity.
A positive shift means more supply at every price.
Equilibrium price
100.0
Unchanged
Equilibrium quantity
100.0
Unchanged
Demand elasticity here
−1.00
Signed price responsiveness
Supply elasticity here
1.00
Price responsiveness
What is a shift, and what happens next?
A shift changes the quantity demanded or supplied at every price. A +20% demand shift multiplies the demand schedule by 1.2; it does not add the same number of units at every price.
As price changes, buyers and sellers move along their new curves until quantity demanded equals quantity supplied. The dashed curves show the original schedules; the grey ring marks the reference equilibrium and the dark dot marks the new equilibrium.
Increasing demand alone raises price and quantity. Increasing supply alone lowers price and raises quantity. When both shift, the result depends on their relative sizes and responsiveness.
What changes when I choose a different shape?
Each form passes through the same reference price and quantity with the same local elasticity. Linear is the starting view because its intercepts and shifts are easy to read. The forms agree closely for small changes but can give different answers for large changes.
| Form | Meaning |
|---|---|
| Linear | A price change adds or removes a constant quantity. Elasticity varies along the curve. Quantities stop at zero. |
| Constant elasticity | A percentage price change has the same local percentage quantity response wherever you are on the curve. Demand approaches infinity as price approaches zero. |
| Exponential | A change in the price index has a constant proportional quantity effect. Elasticity changes in proportion to price; there is no finite demand choke price. |
Elasticity is (dQ/dP) × (P/Q). A magnitude of 1 means a small 1% increase in price reduces quantity demanded by about 1%. Demand’s signed elasticity is negative. The outcome cards show elasticity at the new equilibrium, rather than repeating the starting inputs.
Equations and assumptions
This is a static, competitive, single-market illustration. It assumes price can adjust and everything outside the chosen shifts stays constant. It does not estimate an actual market or specify how quickly adjustment happens. Elasticity magnitudes range from 0.1 to 3; perfectly elastic and perfectly inelastic limits are outside this prototype.
Let p = P/P₀ and q = Q/Q₀, with reference P₀ = Q₀ = 100. Let e be the signed reference elasticity: negative for demand and positive for supply. Let k = 1 + shift/100.
| Form | Quantity schedule | Local elasticity |
|---|---|---|
| Linear | q = k · max(0, 1 + e(p − 1)) | ep / (1 + e(p − 1)) |
| Constant elasticity | q = k · pᵉ | e |
| Exponential | q = k · exp(e(p − 1)) | ep |
The solver finds equality of positive quantities at a non-negative price. If supply already exceeds demand at zero price, the tool reports that no non-negative clearing price exists. It does not invent an equilibrium or assume a rationing rule.
Axes normally start at zero. Closer view focuses on the reference and new equilibria; the axes may adjust as you change inputs. The indexed coordinates remain the source of comparisons.