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Supply and Demand Equilibrium

This calculator finds the equilibrium price and quantity in a simple market.

You enter a linear demand equation and a linear supply equation. Where they cross is the equilibrium.

At equilibrium, quantity demanded equals quantity supplied.
Key idea Demand: Qd = a − b×P (quantity demanded falls when price rises). Supply: Qs = c + d×P (quantity supplied rises when price rises). Equilibrium is where Qd = Qs.

Step 1 – Enter your equations

Use the form Qd = a − b×P and Qs = c + d×P. Enter the numbers for a, b, c, and d.

Demand: Qd = a − b×P

When price is 0, quantity demanded = a. Example: 120.
When price goes up by 1, quantity demanded goes down by b. Example: 2.

Supply: Qs = c + d×P

When price is 0, quantity supplied = c. Example: 10.
When price goes up by 1, quantity supplied goes up by d. Example: 1.

Step 2 – See results

Equilibrium price (P*)
At this price, quantity demanded equals quantity supplied.
Equilibrium quantity (Q*)
This is the quantity traded in the market at equilibrium.

Supply and demand graph

The lines show demand and supply. The intersection is the equilibrium point (P*, Q*).

Example

Demand: Qd = 120 − 2×P. Supply: Qs = 10 + 1×P. So a = 120, b = 2, c = 10, d = 1.

The calculator finds the price and quantity where 120 − 2×P = 10 + 1×P. That is the equilibrium.

Key words

Demand
How much buyers want to buy at each price. Usually when price rises, quantity demanded falls.
Supply
How much sellers want to sell at each price. Usually when price rises, quantity supplied rises.
Equilibrium
The price and quantity where quantity demanded equals quantity supplied. No shortage, no surplus.