Supply and Demand Calculator

Linear market equilibrium price and quantity from demand and supply curves.

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About this tool

Enter the intercepts and slopes of a linear demand and supply curve. The calculator finds the equilibrium price and quantity, the choke prices, and the consumer, producer and total surplus, and draws the market.

How to use

1
Step 1
Enter the demand intercept a and slope b, for Qd = a − bP.
2
Step 2
Enter the supply intercept c and slope d, for Qs = c + dP.
3
Step 3
Press Compute, or load the textbook example.

How it works

Equilibrium is where quantity demanded equals quantity supplied, which solves to P* = (a − c) ÷ (b + d). Substitute it into either curve for Q*. The demand choke price is a ÷ b, where demand falls to zero. Consumer surplus is the triangle between the demand curve and the price; producer surplus is the triangle between the price and the supply curve.

P* = (a − c) ÷ (b + d)      Q* = a − bP*      CS = ½ × Q* × (a/b − P*)      PS = ½ × Q* × (P* − (−c/d))

Worked example

Qd = 100 − 2P and Qs = 20 + 2P

Input
a 100; b 2; c 20; d 2
Output
P* 20; Q* 60; CS 900; PS 900; total surplus 1,800
Walkthrough
100 − 2P = 20 + 2P gives 80 = 4P, so P = 20 and Q = 60. The demand choke price is 100 ÷ 2 = 50, and the supply choke price is −20 ÷ 2 = −10. CS = ½ × 60 × (50 − 20) = 900 and PS = ½ × 60 × (20 + 10) = 900.

Limitations

  • Linear curves only.
  • Slopes b and d must be positive.
  • A textbook model: no market power, taxes or other distortions unless you use the related tools.

Questions

How do I find equilibrium price and quantity?
Set quantity demanded equal to quantity supplied and solve for P, then substitute back for Q. 100 − 2P = 20 + 2P gives P = 20, Q = 60.
What are the choke prices?
The price at which quantity demanded reaches zero (a ÷ b) and the price at which quantity supplied reaches zero (−c ÷ d).
How is consumer surplus calculated?
As the triangle under the demand curve and above the price: ½ × quantity × (choke price − price).
Can supply intercept be negative?
Yes. A negative intercept means suppliers need a positive price before they supply anything.

Features

  • Equilibrium and surplus
  • Choke prices
  • Market diagram
  • Runs in your browser

Related resources

Guides and videos from around the web—opens on YouTube or the publisher’s site.

  • Supply and demand

    Khan Academy

    Equilibrium framing for the linear market tools.

    Watch on YouTube

  • Price ceilings and floors

    Khan Academy

    Binding controls, shortage, and surplus intuition.

    Watch on YouTube

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