The most famous diagram in economics. Where supply meets demand, the market clears — and shifting either curve or adding a tax ripples through price and quantity.
Supply & DemandLive
market equilibrium & surplus
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Where the downward demand curve crosses the upward supply curve, the market clears: that price and quantity are the equilibrium. Shifting either curve moves it. The shaded triangles are consumer and producer surplus — the total gains from trade. A per-unit tax lifts the supply curve, raising price, cutting quantity, and creating deadweight loss.
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How it works
Equilibrium sits where the downward demand curve crosses the upward supply curve. Shocks shift the curves; consumer and producer surplus measure the gains from trade. A per-unit tax raises the effective supply curve, lifting price and cutting quantity while creating deadweight loss — the standard toolkit of introductory microeconomics.
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