Economics game: curve shifts and market equilibrium
An economics game for understanding how prices are formed. A news item appears (a frost that ruins the orange harvest, a trend, a tax, a machine that makes production cheaper) along with the supply and demand graph and its equilibrium. You decide which curve shifts and which way, and what happens to price and quantity. When you answer, the curve moves on the graph and the new equilibrium appears, with arrows on the axes. On hard the curves come with their equations and you work out the equilibrium price and quantity, or the shortage or surplus that appears if the price is set below or above it.
Economics · Secondary, Sixth Form
If tastes, income or the price of a substitute or complement change, demand shifts; if costs, technology, taxes or the number of sellers change, supply shifts. Each news item comes with its reason when you answer, which is exactly what economics exams ask you to explain.
The most common mistake is thinking that if the price of strawberries rises, their demand shifts. It does not: it is a movement along the curves. From medium level those news items appear on purpose, with the option “neither shifts”.
With Qd = a − bP and Qs = c + dP you find equilibrium by setting them equal, and at a price ceiling or floor you work out the shortage or surplus. The numbers come out exact and the wrong options are the typical slips, like adding the constants instead of subtracting them.
"News: “A frost destroys part of the orange harvest”. There are fewer oranges to sell at any price, so supply shifts to the left. The new equilibrium is higher up and further left: the price of oranges rises and the quantity sold falls. On the graph, the S curve moves and the arrows show it on the axes."
Prefer to learn without screens? Try this analogue version:
Find three news items in a newspaper or website that affect the price of something (food, energy, housing).
For each, decide whether it affects supply or demand and which way it shifts it.
Draw the graph with the shifted curve and mark the new equilibrium.
Check whether the real price has risen or fallen as your graph predicts.
If you like Supply and Demand, these activities work similar skills:
Multiple choice on supply, demand, equilibrium, market types and price formation, with an explanation for each answer.
Another economics game: money decisions, interest, inflation and scams, for learning personal finance.
Hand out “buyer” cards with the most they would pay and “seller” cards with the least they would accept, and trade: the price ends up near equilibrium.
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