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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.
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.