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supply and demand curves

EconomicsCOLLEGECOLLEGE

AI-generated cheatsheet with key concepts, formulas, and common mistakes — plus audio, MCQs, mind maps & more.

AI-generated

Supply and Demand Curves Cheat Sheet

Key Definitions


  • Supply Curve: A graph showing the relationship between the price of a good and the quantity supplied. ✅

  • Demand Curve: A graph showing the relationship between the price of a good and the quantity demanded. ✅

  • Equilibrium Price: The price at which quantity supplied equals quantity demanded. ✅

  • Shifts: Changes in supply or demand due to factors other than price. ⚠️

Important Concepts

Law of Demand


  • As price decreases, quantity demanded increases. ✅

  • Inversely related: Price ↔ Demand

Law of Supply


  • As price increases, quantity supplied increases. ✅

  • Directly related: Price ↔ Supply

Market Equilibrium


  • Occurs where the supply and demand curves intersect. ✅

  • Surplus occurs when supply > demand; shortage when demand > supply. ✅

Key Formulas


Qd = a - bP (Demand)
  • Qd: Quantity demanded

  • a: Intercept (max demand)

  • b: Slope (change in demand per price unit)

  • P: Price

Qs = c + dP (Supply)

  • Qs: Quantity supplied

  • c: Intercept (min supply)

  • d: Slope (change in supply per price unit)

Common Mistakes to Avoid


Common Mistake: Confusing shifts in the curve (due to external factors) with movements along the curve (due to price changes).

Memory Tricks


Tip: "DIPS" — Demand Increases, Price Stays (shift right) & Supply Increases, Price Stays (shift right).

Key Diagrams



Price
|
| S
| /
| /
| /
| /
| /
| /
| /
|/______________
| D
|
|________________ Quantity

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