Supply and demand graphs

Firstly, I should tell you that supply graphs are different for demand graphs. These two types of graph should be (hopefully) easy to explain.

Demand graphs:
These were the first type of graph that I came across [out of the two (so far) that I have learnt about].  Demand is how much a customer/consumer is willing to pay for an item. take for example chocolate bars (because most people will buy them). If the price is low, a lot of people will buy them. If the price increases, then less and less people will buy them (and then no one will probably buy them at a certain price).
To show how this works, I'll show the price per unit and quantity demanded in a table.

Price per unit                Quantity
(1 chocolate bar)          demanded            
5p                                  70                     
10p                                60
15p                                50
20p                                40
30p                                20

As you can obviously see, as the price per unit increases, the quantity demanded decreases. This is known as an inverse relationship.
Now, as a graph, it looks like this:

It is now easy to work out the quantity demanded for the chocolate bars at any given price. So if you set the price to 25p, the quantity demanded would be 30.






Supply graphs:
This was the second type of graph that I came across. Supply is where a company will only supply a certain quantity of the good at a certain price. So if I show this in a table, as I did with demand, hopefully things will become clearer.

Price for a                             Quantity
chocolate bar                        supplied            
5p                                         20
10p                                       30
15p                                       40
20p                                       50
30p                                       70

As you can see from the table, as the price for 1 chocolate bar increases, the quantity supplied increases. This means there is a direct relationship between price per unit and quantity supplied. As a graph, it looks like this:



Now , you can easily work out the quantity supplied for the good at any price. So, if the price of the chocolate bar was 25p, the company would supply 60 chocolate bars.








Now, the equilibrium-where demand and supply meet.
If we combine both the demand and supply graphs together, we can find out the equilibrium for the product. At the point of equilibrium, there is no shortage of goods and no excess goods. The graph looks like this:




Blue line=Quantity demanded
Red line=Quantity supplied

Now, it may not be the clearest graph ever, but the point of intersection (the equilibrium) is when the quantity supplied is 45, and the price they are sold for 17p.










This is without the factors which will affect both demand and supply.
--Factors that affect demand include a change in population and simply a change in people's current interests.

--Factors that affect supply include tax and improvements in technology.

Summary points:

-Demand graphs are different to supply graphs.
-Quantity demand and price per unit are inversely proportional to each other.
-Quantity supplied and price per unit are directly proportional to each other.
-The point on the graph where both lines intersect is called the equilibrium.
-The equilibrium is where there is no shortage of goods and no excess goods.