Move the sliders to change the intercept and slope of the demand and supply curves. These values correspond to the standard linear equation y = mx + b The Equilibrium is shown at the top and the surplus is calculated in the bottom right corner. Press the green button to add a Price Ceiling/Floor or Tax/Subsidy. The green value will show the value of the Dead Weight Loss. Hit "Reset" to remove the ceiling/floor/tax/subsidy.
This project is designed to show people the basics of economics in an interactive way. The graph displayed is a Supply and Demand graph. Product price is measured on the vertical axis and quantity of products supplied on the horizontal axis. The Demand Curve (shown in blue) is a graphic representation of how many units of a good or service will be bought at each possible price. It is downward sloping because its relationship follows the law of demand, which states that the quantity demanded will drop as the price rises, all other things being equal. The Supply curve (shown in orange) is a graphic representation of the relationship between product price and quantity of product that a seller is willing and able to supply. It is upward sloping because its relationship follows the law of supply, which states that the quantity supplied will rise as the price rises, all other things being equal. Consumer surplus (shown in light blue) happens when the price that consumers pay for a product or service is less than the price they're willing to pay. It's a measure of the additional benefit that consumers receive because they're paying less for something than what they were willing to pay. Producer surplus (shown in yellow) is the difference between how much a seller would be willing to accept for given quantity of a good versus how much they can receive by selling the good at the market price. The difference or surplus amount is the benefit the producer receives for selling the good in the market. Deadweight Loss (shown in green) is a cost to society created by market inefficiency, which occurs when supply and demand are out of equilibrium. Deadweight loss can be applied to any deficiency caused by an inefficient allocation of resources. Price ceilings, such as price controls and rent controls; price floors, such as minimum wage and living wage laws; and taxation can all potentially create deadweight losses. Tax Revenue (shown in light purple) Is the amount of taxes the government receives by enforcing a tax. Depending on the elasticity of the demand and supply curve, the consumer and producers pay varying amounts of this tax, despite whether the tax was enforced on the buyer or seller.
